Many successful traders think that Forex Hedging is the best way to diminish your trading loss. When a position becomes unprofitable, they often change Hedging methods to protect themselves against further loss and, whenever possible, to turn the unprofitable position into a profitable one. In this article you will get to know what Forex Hedging is and learn when to use it (or not to use).
So what is Forex Hedging? Technically, Forex Hedging presupposes buying /selling of correlating (connected together) currency pairs for the purpose of protecting yourself against unforeseen market movements. Correlating currency pairs for EUR/USD can be EUR/JPY, EUR/CHF, for example. Traditionally, Forex Hedging is used by large companies to protect their assets against market fluctuation, i.e. basically it is used for long-term transactions. Sometimes many traders misunderstand the essence of this method and act harmfully to themselves.
Here is the example of Forex Hedging usage by a trader for his position. Suppose a trader opened a long position for pair EUR/USD, then the market moved down, and the position automatically became unprofitable. At the same time a short position for pair EUR/JPY was opened to hedge the position, i.e. the pair EUR/USD was opened in one side, and the pair EUR/JPY was opened on another side (depending on the first pair). Sometimes this method helps to avoid loss, and when profit of the second position makes up loss of the first position then both positions will be closed.
There are a lot of supporters of Forex Hedging as well as opponents. On this page you can find Hedge EA – Metatrader Expert Advisors that use Forex Hedging principles. Standard tester can’t test all Hedge EA because it doesn’t support multicurrency testing. We’ve developed a tester for Hedge EA testing, which comes with Hedge EA.
In connection with new NFA* rule, which forbids hedging, our company has developed an additional module for CopyTool, allowing to copy lock transactions on the additional account (lock - opening of orders in an opposite direction on one currency pair for reducing loss). If yours expert advisor or your trading strategy uses lock positions, you can use ours tool to continue work with your broker. You will only need to open an additional account at your broker.
Metatrader expert advisor Concept: MultiTrading and Hedging transactions on correlate currencies
Money Management: Stop Loss and Take Profit
Metatrader expert advisor Customization: possible upon the request
$319.56
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IN THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY COUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.
