You can trade whichever pair you are most comfortable with. However, I would suggest staying away from pairs that have a large spread or are highly volatile. That being said, you will make your life easier if you choose a high-probability countertrend turning point. Again, just pick one… support and resistance or RSI are good places to start. Start waaaay smaller than you think is safe.
A good rule of thumb is to calculate what would happen if your position was down 1, pips. This could happen, so be prepared.
Again, you will need to demo trade for some time so you can learn how to get out of these situations. That said, I believe in having a hedge, at most. Without a doubt, the worst thing that can happen to you in Zen8 hedging is being stuck with a large position that is down pips, or more, on one side of your books. For example, if you have a large long position that is down pips and you are flat on the short side, it will take much longer to Roll-Off enough profits on the short side to close out that pip deficit.
You might think that the worst thing that can happen is the market moves violently, like it did during Francogeddon. In this PDF guide, you will learn things like:. The reason that I stopped hedging, and started up again, can be summed up in one word: mindset. They can cause us to do things that move us away from things that we want and towards things that bring us pain.
Someone in my mastermind group pointed out that some people have a subconscious need to solve problems. Once they solve a problem, they get bored and look for another problem to tackle. My stress was self-imposed.
100% Hedging
I was micro-managing my positions and was always anxious about them. Once I adopted more of a swing trading mindset, hedging became easier and more fun. Conventional trading wisdom says that you always need a stop loss. This is one of those exceptions.
My Best Forex Hedging Strategy for FX Trading
I was stuck between trying to learn how to build a small account and how to build a track record to attract investors. Depending on what day of the week it was, I would lean one way or the other. That was a poverty mindset. You can watch his trades in real-time here. His shared his Coastline Trading Strategy in his presentation and it was very similar to the way that I had been hedging. He started trading this way because he noticed that a lot traders who won online trading contests were hedgers.
I also encourage you to keep learning new things and attend trading events. It can be very easy to start seeing profits right away. If that happens, then you are in for an education in digging yourself out of a deep hole. Get cocky and it can become a total grind and you might feel like poking your eyes out with a rusty nail. This technique uses the arbitrage of interest rates roll over rates between brokers. In this type of hedging you will need to use two brokers. One broker which pays or charges interest at end of day, and the other should not charge or pay interest. However, in such cases the trader should try to maximize your profits, or in other words to benefit the utmost of this type of hedging.
The main idea about this type of hedging is to open a position of currency X at a broker which will pay you a high interest for every night the position is carried, and to open a reverse of that position for the same currency X with the broker that does not charge interest for carrying the trade.
This way you will gain the interest or rollover that is credited to your account. The currency to use.
However you should check with your broker because each broker credits a different amount. The interest free broker. This is the hardest part. Before you open your account with such a broker, you should check the following: i.
Does the broker allow opening the position for an unlimited time? Does the broker charge commissions? Because, when the broker charges you money for keeping your position, the your broker will likely let you hold your position indefinitely. Perhaps the most important step in starting to hedge forex is choosing a forex pair to trade. This is very much down to your personal preference, but selecting a major currency pair will give you far more options for hedging strategies than a minor.
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Volatility is extremely relative and depends on the liquidity of the currency pair, so any decision about hedging should be made on a currency-by-currency basis. Other considerations should include how much capital you have available — as opening new positions requires more money — and how much time you are going to spend monitoring the markets. You can test out your hedging strategies in a risk-free environment by opening a demo trading account with IG. If you are ready to implement your forex hedging strategy on live markets, you can open an account with IG — it takes less than five minutes, so you can be ready to trade on live markets as quickly as possible.
Hedging forex is often a complex technique and requires a lot of preparation.
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Here are some key points for you to bear in mind before you start hedging:. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk.
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My Best Forex Hedging Strategy for FX Trading « Trading Heroes
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