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Thread: Hedge?!?!

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    Intraday Master etrader's Avatar
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    Default Hedge?!?!

    I know but I want to become assure that there is no limitation in FX Egypt for Hedging and similar strategies ....

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    I have been hedging my account for more 1 month. It still ok...

    Waiting until i find new fix trading system to trade normally.

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    Yes I understand that hedge is not true forex

    but it is very important to have this choice as sometimes it is really needed

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    Hedge is most important feature for a broker

    Frankly, I recooment not to use a broker not allowing hedge

    Hedge itself is not a solid strategy for making money in forex

    But....

    sometimes you have an order with high loss, then you will leave it and waiting for the market change

    In this circumstance, you may wish to trade on the reverse direction of the same pair (not to compensate the loss but only as a good opportunity for trade. This behavior is not considered as a Hedge in the terminology of forex, but software cannot distingush. Those broker not allowing hedge will avoid using such great opportunities.

    Thanks FX Open

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    How much deposit do you use for hedging here. Anybody can tell me ?

    Nic

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    How much ?

    what do you mean ?

    If you wish to hedge the amount depends on your initial trade

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    I am very new here, could someone explain hedging strategy for me?

    In simple words, for lamer like me, please!!!

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    Okay fella,

    Roughly, let me start with some examples,

    Hedge: the market has high liquidity, and you are nto sure to buy or sell, you will buy and sell at the same time. Then one will earn your profit. and you will wait for the reverse direction of the market to earn money even from the other order.

    Urgency Hedge: This is the type of hedge that the admin perfer to do, not that noted above. When you are losing due to a mistake order, your margin are sucking dry; then, you may lose everything. In this ocassion, you will do an inverse order. Then, your margin will not be used as the profits of two orders are opposite to each other (one negative and one positive)

    And the third kind that I do not consider it Hedge: you have an old order with loss (some traders believe that should close such trades to avoid further loss and to use its money for profitable trades), you wish to trade independently (just because it is good opportunity, not to cover your old trade loss) on the inverse direction. In this case, software will not allow if a broker forbids Hedge.

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    Well those are kind of hedges etrader.

    A real hedge like the hedgefund pros do would be to BUY EUR/USD and BUY USD/CHF thus you have hedged (Both buy and sell) the USD. While losses are minimised by opening the trade at an optimum level of correlation, and the fact that often, these two pairs move in opposite directions.

    Why buy and hold like that? For those who earn from swap interest, this combination of pairs earns positive swap. The hedge can also be closed at a substantial profit in it's own right at a later date.

    It worth noting that the above hedge also Buys Euro and Sells Swiss Franc so the eur/chf chart is worth looking at before entering since you would be in essence also buying eur/chf.
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    Quote Originally Posted by RebateFX.com View Post
    Well those are kind of hedges etrader.

    A real hedge like the hedgefund pros do would be to BUY EUR/USD and BUY USD/CHF thus you have hedged (Both buy and sell) the USD. While losses are minimised by opening the trade at an optimum level of correlation, and the fact that often, these two pairs move in opposite directions.

    Why buy and hold like that? For those who earn from swap interest, this combination of pairs earns positive swap. The hedge can also be closed at a substantial profit in it's own right at a later date.

    It worth noting that the above hedge also Buys Euro and Sells Swiss Franc so the eur/chf chart is worth looking at before entering since you would be in essence also buying eur/chf.
    thanks for nice information

    Yes, this is the real hedge, but needs professional skill, and not the common hedge for amateurs

    If you buy something based on a correct calculation, but goes wrong due to sudden decrease (you know the high liquidity of forex), you can be sure that after the market reach its stable condition, the price will rise again, and you can make your expected profit.

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    Thumbs up thanks!

    Quote Originally Posted by etrader View Post
    Okay fella,

    Roughly, let me start with some examples,

    Hedge: the market has high liquidity, and you are nto sure to buy or sell, you will buy and sell at the same time. Then one will earn your profit. and you will wait for the reverse direction of the market to earn money even from the other order.

    Urgency Hedge: This is the type of hedge that the admin perfer to do, not that noted above. When you are losing due to a mistake order, your margin are sucking dry; then, you may lose everything. In this ocassion, you will do an inverse order. Then, your margin will not be used as the profits of two orders are opposite to each other (one negative and one positive)

    And the third kind that I do not consider it Hedge: you have an old order with loss (some traders believe that should close such trades to avoid further loss and to use its money for profitable trades), you wish to trade independently (just because it is good opportunity, not to cover your old trade loss) on the inverse direction. In this case, software will not allow if a broker forbids Hedge.
    This is great explanation, etrader, you must really know your stuff!

    I understand everything from what you have said, it's just I didn't know that one can open SHORT and LONG trade in one currency at the same time.

    You see, the sucky broker that I had before (the one that I lost my money to), would not allow that. For example, if I open a position in USD/JPY by byuing, then later on, if I click SELL on the same surrency, it will actually close my previous order. So, I thought that this is normal, therefore I didn't even think that broker put restrictions like that.

    well, whereas the "real hedging" that RebateFX is talking about, it way more complicated and reqires alot of experience and skill to perform correctly.

    Now, that I know a little more about forex, I already feel better

    Thanks alot you guys!

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    This is the reason I strongly recommend do not use a broker (even a major and reliable one) who do not allow hedge

    FX Open allow hedge, as a service to the traders

    But you should use it under urgent circumstance

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    Quote Originally Posted by etrader View Post
    This is the reason I strongly recommend do not use a broker (even a major and reliable one) who do not allow hedge

    FX Open allow hedge, as a service to the traders

    But you should use it under urgent circumstance
    Thanks alot for your info, I will note it down, and in case of emergency, will implement the system!

    I think that this way one can avoid some of our losses, don't you think so?

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    Yes, hedge in some cases is the best strategy and can avoid losses

    But when you try to use hedge technique, you should know what you are doing

    Common hedge for buying and selling at THE SAME TIME is not a good strategy for forex

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