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  • Hedging is out

    Due to explosion in number of traders involved in forex trading, lot of brokers started offering feature of hedging in their trading platform.

    Hedging is nothing but a feature in which you can have two trades opened on same currency pair in opposite direction. So, you can have a short trade on GBP/USD as well as long trade on GBP/USD open at the same time. A lot of traders wonder what is the advantage of doing this because the profits of one trade will be cancelled by the loss in the other.

    This is true! But this is advantageous for certain set of traders as they use the hedging technique to identify trend in the market. Imagine you have two trades open using hedging. You can keep them open as long as you want since you know that lose from one trade will be componsated by the profit in other. Once you find the direction of the trend, you can close the losing trade and keep the winning going.

    ==> So, the NFA (National Futures Association) decided that they need to stop this practice! And they campe with a rule which will disallow hedging practice effective 15-May-09.

    So, all the traders who were using the hedging technique will now have to look for some other forex trading system to make money from forex market.

  • #2
    Re: Hedging is out

    I think this only applies to NFA regulated, U.S. firms.

    Comment


    • #3
      Re: Hedging is out

      You are probabily right! :ugeek:

      Comment


      • #4
        Re: Hedging is out

        Originally posted by 4xmeter
        You are probabily right! :ugeek:
        Speaking of brokers, any recommendations for good non-U.S. forex brokers? Thanks

        Comment


        • #5
          Re: Hedging is out

          Too bad.

          Hedging has big possibilities.

          Regards,

          Comment


          • #6
            Re: Hedging is out

            Hi William!

            I would be watching how this particular ruling affect the News price movement. Hoping for the better.!

            Comment


            • #7
              Re: Hedging is out

              Some broker don't allow hedging. I don't know why.

              Comment


              • #8
                Re: Hedging is out

                FXDD also email me on that .......

                Comment


                • #9
                  Re: Hedging is out

                  Yep, FXDD emailed me too.
                  For UK ones I use Alpari UK a,d FXCM is in the process of switching to FXCM UK.

                  Comment


                  • #10
                    Re: Hedging is out

                    Inspiring indeed, thx

                    Comment


                    • #11
                      Re: Hedging is out

                      I am using Oanda, so no issue to me cos Oanda don't allow hedging from the beginning.

                      Comment


                      • #12
                        Re: Hedging is out

                        bad news for those who used to hedge

                        Comment


                        • #13
                          Re: Hedging is out

                          excuse me but..if I want still to use hedging.. couldn't I simply open 2 different account and make a buy in one and a sell on the same pair in the other one?

                          Comment


                          • #14
                            Re: Hedging is out

                            Originally posted by 4xmeter
                            This is true! But this is advantageous for certain set of traders as they use the hedging technique to identify trend in the market. Imagine you have two trades open using hedging. You can keep them open as long as you want since you know that lose from one trade will be componsated by the profit in other. Once you find the direction of the trend, you can close the losing trade and keep the winning going.
                            to identify an existing trend I don't need to hedge - just my opinion.
                            I can't figure out any advantages of hedging on the same pair. can someone give me an example?

                            Comment


                            • #15
                              Re: Hedging is out

                              You guys think that other bookers(not us) will follow these rules?

                              Comment

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