kerr to u asked:
how does a person make money by hedging when they go long and short on the same currency pair, what is the rational behind this.
how does a person make money by hedging when they go long and short on the same currency pair, what is the rational behind this.
Also what’s a good honest broker that provides leverage up to 400
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Hedging does not make you money. It simply “freezees” your position without having to get out and reduces your risk.
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Hi,
Generally, most retail traders use hedging when they are in a losing trade position.
For example, I might go long the EUR/USD, but the market price immediately tumbles down. In order to protect myself against further losses, I place a short order so that any further downard movement in price will not affect me — I may lose in the long position, but I partially make up for that loss by the gains in my short position.
This is how most traders I know ‘hedge’ against losses. Unfortunately, this is a terrible way to trade.