Does anybody know about forex hedge ?
im looking for a real and profitable forex hedging system
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Tagged with: anybody • forex hedging system • Forex Questions • hedge • system
Filed under: Forex Information
If I told you the secret, I would have to kill you.
All kidding aside, DO NOT risk your money with information found here.
Hedging in FOREX is you open a position in an instrument and then open an opposite position in the same instrument while keeping the old one.
Example:
Suppose you opened a position by buying (GBP/USD), and later on you decided to open a new position by selling (GBP/USD) without closing the previous (buy) position. This is called HEDGE.
So, you’ll have opposite positions for the same instrument (GBP/USD).
This method is usually used to protect profits or stopping losses.
Please note that not all firms give hedge accounts.
Cheers.
One purpose of taking a forex position is to ‘hedge’.
For instance, you are a U.S. company selling something to a U.K. company for one million U.K. pounds. You based your price (in UK pounds) on your costs (in US dollars) and the exchange rate between pounds and dollars.
If the value of the GBP does down against the USD, your company can end up making no profit, or even losing money, on this order.
When they get the order, they can ‘hedge’ by selling one million pounds and receiving an equivalent amount of USD. When the company receives the one million pounds from the customer, they sell off the debt. Thus, they make (approximately) the profit as they calculated initially.