For those pro and veteran traders, the forex hedging strategy is a common thing that can be so helpful to protect from losses. It provides traders an opportunity to reduce the loss, even turn it into profit. It can be done by buying and selling orders in instruments. It is like getting insurance onto your trade.

The forex broker that allows placing trades is basically direct hedges. You can place a trade by buying one currency pair while also selling the same pair. By practicing this hedge pattern, you can make money and reduce additional risk from the forex market at the right time.

Hedge in forex can be a protection to avoid huge loss. It allows traders to go the opposite direction without having close to the previous initial trade you’re thinking of. Traders can certainly close their initial trade and re-enter the forex market later to get a better price.

How does Forex Hedging work?

The main focus of hedging is to reduce and control the risk. You can process it simply by opening your initial trade while anticipating a move in another direction. By taking a hedge, it means you run counter to expected movement and manage an open position without incurring losses when your intuition goes wrong.

Commonly, people use forex hedging to preserve previous earning you’ve already take. Theoretically, hedging looks so easy and profitable. It is true due to the common direct hedge. However, facing complex hedges is a quite difficult case.

It isn’t a direct hedge, so it requires more trading experience to execute them successfully and effectively. You can try an opening position in two currency pairs that tend to have correlated movements. Check it from its correlation matrix to find the strongest opposition. It means a pair to go up and a pair to go down.

Keep in mind to perform trading and hedging to secure your money in the best forex broker only. You can’t master it immediately, it takes a long journey. However, practicing more in a trusted broker can sharpen your skill significantly.

Simple Forex Hedging Strategy in 5 Easy Steps

Hedging can be a huge part of gaining success trading if done carefully. Playing it without any adequate experience can omit your account balance completely in no time. To perform it safely, you should have enough experience and knowledge about trading and hedging to follow these steps below.

1. Choose the right pair. Currency pair selection gives a big role in forex hedging. Try to choose a famous or major cross pair, like EUR/USD, USD/GBP, or others. Avoid unfamiliar par like CAD/CHF, AUD/NZD, or other similar currencies. After picking a perfect major combination, select the time frame. For instance, you choose consolidation in 15-minute. It means you can run a trading method at that time.

2. See the current trends by using drawing channels or moving averages.

3. Execute to buy or sell based on your analysis and intuition. More quickly it is decided, the better it will be since the distance between order and execution is not too far. Traders can perform it simultaneously by limiting it with Stop or Limit Order.

4. Wait a minute and let the price moves as it should be. Wait for more time until the order moves in a certain range. When it seems to reach a certain range, close the losing position, and perform buy and sell back immediately.

5. Repeat it from step 1 continuously until you make a profit.

Performing hedging can be either useful or dangerous for traders. Along with enough experience in trading, choosing a trusted broker is a must to avoid scams. Didimax forex broker is a perfect platform to start trading by trying the demo version. As time goes by, you can try this forex hedging strategy to secure your income from a big loss.