Friday 21 November 2008

ForexGen | How to Hedge ?


Proper risk management and hedging are essential when trading forex,futures stocks... Highly leveraged forex trading (400:1) can lead to exponentially large gains or exponentially large losses. Forex Hedging is a very important aspect of risk management and every trader should know what a forex hedge is and how to implement a hedging strategy

A hedge is placed when a trader enters the market with the specific intent of protecting existing or anticipated physical market exposure from an adverse move in futures prices. Both hedgers and speculators can benefit by knowing how to properly utilize a hedge. forex traders, marketers, bankers and end-users may have specific trading and/or hedging needs that require proper risk management.

Speculators can hedge existing positions against adverse price moves by utilizing combination futures and options on futures trading strategies. A good Forex trading platform can help analyze, develop and implement trading and hedging strategies based on your short and long-term objectives.

Forex traders must have a working knowledge of the risk management. First, learn how to properly manage risk by utilizing different types of risk management such as stop and limit orders to protect yourself against adverse foreign exchange price moves. Learning to use the orders in combination can improve your foreign exchange trading technique by allowing you to realize maximum profit potential while, at the same time, limiting your potential losses. Next, make sure you fully understand how to use both Forex Technical and Forex economic calander indicators when making trading decisions. Also take the time to learn hedging and trading strategies and techniques that can reduce both risk exposure as well as lower your trading costs - a number of resource links are listed below. Finally, make sure you know how to properly read and interpret your account statements to help you monitor the positions in your account.

Hope become a better trader

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