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In very simple terms, forex hedging is the act of entering into a financial contract in order to protect against unexpected, expected or anticipated changes in forex exchange rates.
in generally the hedging stratigies are very dangours
some time market do not go correct with you
Some brokers allow you to place trades that are direct hedges. Direct hedging is when you are allowed to place a trade that buys a currency pair and then at the same time you can place a trade to sell the same pair.
The way a simple forex hedge protects you is that it allows you to trade the opposite direction of your initial trade without having to close that initial trade. It can be argued that it makes more sense to close the initial trade for a loss and place a new trade in a better spot. This is part of trader discretion.
As a trader, you certainly could close your initial trade and enter the market at a better price. The advantage of using the hedge is that you can keep your trade on the market and make money with a second trade that makes profit as the market moves against your first position. When you suspect the market is going to reverse and go back in your initial trades favor, you can set a stop on the hedging trade, or just close it.
The main reason that you want to use hedging on your trades is to limit risk. Hedging can be a bigger part of your trading plan if done carefully. It should only be used by experienced traders that understand market swings and timing. Playing with hedging without adequate trading experience could be a disaster for your account.
I Wish You Happy Trading!
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