100% Forex Hedging Strategy
Hedg forexdiscountbrokersg f forexrebatesbrokersexbonusrebateef="https://www.libyantrader.com">forex discount brokers defined as holding 2 or more positions at the same time, with the aim of offsetting the loss of the first order with the gain of the other. A common hedge is to open a position in currency A and then open an opposite position in the same currency A. This type of hedging protects the investor from margin calls, because if the first order loses the second one makes a profit, and vice versa. However, traders have developed additional hedging techniques in order to profit from hedging instead of just offsetting losses. On this page we will discuss some of the hedging techniques. 1. 100% hedging. This technique is the safest, most profitable of all hedging techniques while maintaining the lowest risk. This technique uses inter-broker interest rate hedging (rolling rates). In this hedging technique you will have to use 2 brokers. One broker pays or receives interest at the end of each day and the other one does not receive or pay interest. However, in this case the trader should maximize your return, or in other words maximize the return of this type of hedging. The main idea of this hedge type is to open a position in currency X with a broker that pays you a high amount of interest every night and to open the opposite position in the same currency X with a broker that does not charge interest. This way you will get interest or overnight rates to your cashback forex. However, there are many factors you need to take into account. a. The currency used. The best currency pair is GBPJPY, because at the time of writing this article, the amount paid to your account per lot is 24 USD per day. However, you should know your broker because each broker pays a different amount. The range is from $10 to $26. b. No interest brokers. This is the more difficult part. Before you apply for an account with such a broker, you should know the following information: i. Does the broker allow unlimited positions? ii. Some brokers charge a $5 per lot overnight fee, which is a good thing, even if it looks bad. Because, when a broker takes your money to keep your position, the broker will be more than welcome to hold your position. c. The equity of your account. Hedging requires a lot of money. For example, if you want to use GBPJPY, you will need 20,000 USD per account. This is very necessary because the maximum monthly volatility of GBPJPY in previous years was 2000 pips. You do not want to get a margin call for one of your accounts. Dont forget that when you open 2 positions with two brokers, you will pay the spread, which is about 16 pips. If you use the common 1 lot, its about $145. So you enter a trade with a loss of $145. So you need 6 days to offset the spread. So if you get another margin call, you will need to close the position and transfer it to your other account and reopen it. Each time this happens, you will lose $145! It is very important that you do not get a margin call. A large amount of equity maintenance is required, or an efficient transfer of funds between brokers. d. Money management. The best way to manage such an account is to withdraw earnings every month. Additional earnings can be withdrawn from one account and deposited into the losing account to balance it. However, this can be costly. You should find out if your broker allows you to withdraw money when you have orders. One effective way is to use the services of an intermediary provided by a third party company.
No reproduction without permission： forex discount brokers » 100% Forex Hedging Strategy