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How to profit from hedging transactions in Forex

{}Posted in2023/2/25 13:26:48 | 6Browse

Hedge trad forexrebatecommissiong generally refers to the simultaneous conduct of two quote-related, opposite direction, the number of equivalent, offsetting profit rebatesforexbroker loss transactions quote-related refers to the impact of two commodity prices market supply and demand relationship ex best forex rebate companyts in the same nature, supply and demand changes, while the price of the two commodities will affect the direction of price changes in the same general direction opposite refers to the direction of the purchase and sale of two transactions opposite, so that no matter what direction the price change, always a profit and a loss if it is a foreign exchange transaction, for example, while selling bestforexrebatecompany.0 fxrebatecentral lots of EUR/USD simple hedging transactions will certainly cashback forex profit. Change, always a profit and a loss if it is a foreign exchange transaction, for example, for example, while selling 0.01 lots of EUR / USD simple hedging transactions will certainly not be profitable, while buying and selling, and then close long and short positions at the same time, due to the existence of trading spreads, the results of the transaction is certainly a loss of spreads that part if the position is held overnight, will also generate swap interest, traders will basically squeeze on the swap interest Traders buy and sell at the same time, the trader must be to pay the overnight interest Why hedging transactions, the most common is the need to hedge risk and to arbitrage here not to elaborate on the professional hedging, here to briefly talk about as a small retail investors I hedge a little shallow views of the small retail investors in the spot foreign exchange market use hedging transactions to arbitrage, the general usage is, bullish on the medium and long-term trend of a currency pair The medium and long term here is only relative to the day trade, but there is a short term trading opportunity (intraday trading), this short term trading opportunity and their own bullish medium and long term trend is contrary to the narrative may be very arguable, the following to illustrate the so-called hedge arbitrage is better described as a specific trading strategy assume that a trader believes that before the UK completely out of the European Union, the pound medium and long term trend will be a set of twists and turns. In the situation is completely clear before the pound will not rise too much, and as long as the United Kingdom and the EU quarrel over the Brexit agreement, the pound must be under pressure but found that the pound has a short term upward trend, so at 1.3150 while buying and selling 0.1 lot of GBP / USD, because it is a hedge transaction, no matter how volatile the market will not have the risk of blowing up, so there is no need to set a stop loss due to a number of figures to make positive positive British exit agreement speech, the pound really rose when the pound rose to 1.3250, traders believe that the current positive will not push the pound up too much, so choose to close the long position at 1.3250, profit 100 U.S. dollars key here, once the closure of a direction of trade does not exist after the hedging transaction at this point is equivalent to traders in 1.3150 short 0.1 lot of pounds, must Set a stop loss, perhaps the pound good constantly a fly due to traders in the medium and long term bearish pound, set a stop loss of 200 points should be reasonable, the stop loss point is 1.3350 after the market as shown above, the pound on September 21 intraday plunge if the trader in the pound back to 1.3080 when see good, close 0.1 hand pound short single, profit of $ 70, the total profit is $ 170 here will What is the profit/loss ratio? The higher the profit-loss ratio is definitely better a view that the profit-loss ratio is 1.7:2, bear the risk of losing $200 to get $170 profit, the result of a profitable transaction is actually a bad deal another view that the profit-loss ratio is 1.7:1, is a good deal why say 1.7:1 it is that is actually bear the risk of losing $100 to get $170 Profit is clearly 0.1 hand short single stop loss of 200 points, the risk should be a possible loss of $ 200 reason is that even if the 1.3150 short single at 1.3350 was a stop loss of $ 200, but before the 0.1 hand long single has been a profit of $ 100 here not to dwell on which statement is correct, this is the use of hedging as a tool for a trading strategy deadly hedging actually what I see Hedging is not the above form I often see hedging are deadly hedging, in fact, is a single lock you may have heard of, or even used a deadly hedge occurs in the low short or high do more, after a substantial loss in the high buy or sell in the low, lock single to save life as shown below, lock single although there is no danger of blowing up, but after all, the price gap between buying and selling, losses have been there many traders The third hedging strategy is to lock in certain profits after hedging, as shown in the chart below I am long term bullish CAD/CHF, and bought CAD/CHF at 0.7424 once rose to 0.7495, I did not take profits to end the transaction, because I was afraid that after the higher cost to buy back in the plate there are short term short opportunities, so a hedging transaction then the Canadian dollar CHF trend repeatedly, the short single at 0.7400 profit to close, long single continue to hold, stop loss set at 0.7350, to September 27 plate Canadian dollar CHF rose again to 0.7495, currently continue to hold Some people may ask, why in the first single touch 0.7495 when why not first take profits to close, and then buy again down? The reason is that at that time certainly do not know how the market trend, just see a short term short opportunity, do not want to miss if short after the Canadian dollar Swiss franc immediately rise does not matter, at least has locked a certain profit if the long position directly close, most likely the Canadian dollar Swiss franc a flight to the sky after the short position profit bet it will continue to rise back, currently see indeed according to the expected direction of development of the Canadian dollar Swiss franc may break through 0.7500, opening up the upward trend