Forex Brokers for Hedging are FX brokers that allow their clients to use hedging while trading the financial markets; Forex hedging is considered a popular trading strategy that is used by many traders.

What is Hedging in Forex Trading?

Hedging is a strategy used by traders to protect a position from an adverse move in the foreign exchange market. Hedging consist of two strategies, full protection perfect hedge and partial protection imperfect hedge. To keep it simple, hedging in FX trading is a tool that ensures traders from facing unpredictability of the financial markets. The trading strategies revert to the action of an added buy\trade of a currency to avoid the risk involved in the initial buy\trade. Hedging is a form of guarantee for traders in Forex, but it is a method best used by traders who have experience since they better understand the structure and the volatility of the financial markets, as well as the timing in the market. If a novice trader attempts to implement hedging as a trading strategy, without the understanding of the markets, it could lead to huge financial losses.

Despite the fact that hedging is a popular form of trading strategy for Forex traders, not all FX brokers permit hedging as part of their services. Many specialists are against the action of hedging, which is why it is not accepted in all brokers and trading platforms. Forex brokers in the US are strict in forbidding hedging due to the United States federal law, known as the First In First Out policy (FIFO).

What is the Perfect Hedge and an Imperfect Hedge?

The perfect hedge strategy refers to the version of a hedging strategy where a Forex trader creates a hedge that fully protects and eliminates any risk to an existing position from market volatility. This can be achieved by holding both short and long positions, at the same time, on the same currency pair.

Imperfect hedging is a hedge strategy where a Forex trader partially protects an existing open position from volatile market movements by using Forex options. This method of using Forex options to protect long or short position only eliminates some of the risk and therefore, it is called imperfect hedge. Some Forex brokers allow hedging on their trading platforms and some others do not allow it. Hedging is simple but tricky strategy that is best used with caution. Another popular trading strategy is scalping. Visit our simple Forex trading course to learn more about Forex trading and the various trading strategies.

Forex Brokers for Hedging List

There are many FX brokers that provide traders with the option of hedging, since it is a popular trading strategy. Some of the most accommodating Forex brokers for Hedging are: OctaFX, IC Markets, and FP Markets.

Broker
Description
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Octafx
OctaFX
Regulation: CySec
Min. Deposit: $/€/£ 5
Leverage: 1:500
Spreads: Low as 0.4 pips

Review


FP Markets
FP Markets

Regulation: ASIC, CySEC
Min. Deposit: $/€/£ 100
Leverage: 1:500
Spreads: Ultra Tight from 0.0 pips

Review


NSBroker
NSBroker
Regulation: MSFA, BaFin, FCA,
Min. Deposit: $250
Leverage: 1:100
Spreads: Low as 1.2 pips

Review
XM
XM
Regulation: CySEC,FCA,ASIC
Min. Deposit: $/€/£ 5
Leverage: 1:500
Spreads: Low as 0.1 pips

Review
Avatrade
Avatrade
Regulation: ASIC,JFSA,FSCA
Min. Deposit: $/€/£ 250
Leverage: 1:400
Spreads: Floating from 1 pip

Review


IC Markets
IC Markets
Regulation: ASIC
Min. Deposit: $/€/£ 200
Leverage: 1:500
Spreads: Low as 0.0 pips

Review


Etoro
Etoro
Regulation: CySEC,FCA,ASIC
Min. Deposit: $/€/£ 200
Leverage: 1:30
Spreads: Variable

Review

XTB
XTB
Regulation: FCA
Min. Deposit: $/€/£ 250
Leverage: 1:30
Spreads: Low as 0.1 pips

Review


IQOption
IQOption


Regulation: CySec
Min. Deposit: $/€/£ 10
Leverage: 1:1000
Spreads: Floating from 1 pip

Review


OlympTrade
OlympTrade
Regulation: IFC
Min. Deposit: $/€/£ 10
Leverage: 1:500
Spreads: Low as 0.0 pips

Review
Globex360
GlobeX360
Regulation: FSCA
Min. Deposit: No min Deposit
Leverage: 1:500
Spreads: Low as 1.6 pips

Review

Forex Hedging Strategies for Experienced Traders

 

There are various types of hedging strategies that many Forex traders can choose from to use. Some are simple and easy to adopt, while others are more complicated; it all relies on the experience and the preference of the trader. However, there are some brokers that prohibit types of hedging strategies. There are four types of hedging strategies: simple Forex hedging, Complex Hedging, Multi-currency Pairs, and Forex Options.

The first type of hedging strategy is the Simple Forex Hedging, where trading service providers provide traders with the option to place a trade, in order to purchase a currency pair. As traders place a trade to buy a currency pair, they are allowed to place a trade to sell the same type of currency pair. For this trading strategy in hedging, the profit will never reach above zero while the position is open. However, if trades time the trades perfectly, then profit is possible and limiting financial risk. The second type of hedging strategy is Complex Hedging, but it is mostly a method for traders to work around the rules of brokers who do not permit hedging services.

The third trading strategy for hedging is multi-currency pairs, where traders have the option to buy\sell two currency pairs at the same time. Much like the Simple Forex Hedging strategy, the Multi-currency pairs strategy is more complex and it is best if different currency pairs to traded, to avoid confusion. The fourth and final trading strategy for hedging is Forex Options, where there is an already determined price and time frame to begin the trading session. Forex Options is a trading strategy that depends on two elements: timing and experience.