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hedge forex positions with no loss


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"I want to hedge my forex positions (i.e buy or sell) with other financial instruments"

 

You can use options to hedge your forex positions, have never seen a good book on the subject though, here's a good one on commodity options which is relevant:

 

http://www.amazon.com/dp/0857193198

http://sjovanovic.com/the-book/

Edited by gadfly
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Hello. Please excuse me for my newbie question. I want to hedge my forex positions (i.e buy or sell ) with other financial instruments with no loss to my capital. Is it possible anyway ? How i can do this if this possible ? Thanks.

 

Yes you can do this with Forward contracts or with instruments that has high negative correlation with an instrument you can trade.

track correlation on at least 6 month history.

cheers.

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  • 2 months later...
Guest Moon_shine
Hedging is simply coming up with a way to protect yourself against big loss. Think of a hedge as getting insurance on your trade. Hedging is a way to reduce the amount of loss you would incur if something unexpected happened.
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Existen otros varios métodos que permiten cubrir sus pérdidas especulando en el mercado de cambios. El primero consiste en diversificar su cartera incluyendo valores que reaccionan de manera opuesta a los distintos indicadores. En este caso también la amplitud de su posición desempeñará un papel esencial.

 

Por ejemplo, puede especular sobre la subida del Dólar a corto plazo y en paralelo, abrir una posición larga sobre el oro. Por lo tanto, si registra pérdidas sobre el Dólar, éstas serán compensadas a más largo plazo con las ganancias sobre el oro que reacciona al alza cuando el Dólar baja.

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There are other several methods that allow you to cover their losses by speculating on the exchange market. The first consists in diversifying its portfolio including values that react in a way opposite to the different indicators. In this case also the breadth of its position will play an essential role. For example, you can speculate on the rise of the dollar in the short term and in parallel, open a long position on the gold. Therefore, registering losses over the dollar, these will be longer-term with cleared gains on gold that reacts to rise when the dollar falls.

 

Existen otros varios métodos que permiten cubrir sus pérdidas especulando en el mercado de cambios. El primero consiste en diversificar su cartera incluyendo valores que reaccionan de manera opuesta a los distintos indicadores. En este caso también la amplitud de su posición desempeñará un papel esencial.

 

Por ejemplo, puede especular sobre la subida del Dólar a corto plazo y en paralelo, abrir una posición larga sobre el oro. Por lo tanto, si registra pérdidas sobre el Dólar, éstas serán compensadas a más largo plazo con las ganancias sobre el oro que reacciona al alza cuando el Dólar baja.

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Traders use hedge to protect their deposits. Usually if a trader sees that the deal has turned in a backward trend from what was expected, he opens a lock deal, trying to stop the losses. In this case it's better to use stops. Ev be en if you loose, it won't be a catastrophe for you.
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  • 1 year later...

strategy

 

fxrival,

 

You mentioned to PM you about the "risk free" strategy in the following thread.

 

PM me I can show you risk free strategy (for free)

 

I was thinking of using something similar but in a more modest way. For example to use a break even strategy for a positioning tool on a shorter timeframe while taking either a long short view on a higher timeframe itself, if that makes sense?

I though perhaps the idea you have could be adapted for that purpose? If you think so then I would be greatful to try it out As my thinking was that even a nearly-breakeven strategy would work for me then even if your strategy was risk free 90 out of 100 times then that soundsa great idea.

 

Thanks

Moomic

Edited by moomic999
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Guest Siyan jheel
Yes, Forex is not a place where you could only earn a profit, you need to understand that losses are part of the Forex Trading too and with loss, you earn experience, which is much more valuable than the money.
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Guest machete
Hello. Please excuse me for my newbie question. I want to hedge my forex positions (i.e buy or sell ) with other financial instruments with no loss to my capital. Is it possible anyway ? How i can do this if this possible ? Thanks.

 

The general way to do that is to use futures or options but you should clearly understand which risk you want to hedge and which risk you have to leave as is, since it's impossible to expect return without taking risk.

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