Forex hedging is a popular trading strategy used by many traders. Forex Brokers for Hedging, are fx brokers that allow their clients to use hedging while trading the financial markets.
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 consists two strategies, full protection perfect hedge and partial protection imperfect hedge.
What is the Perfect 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 a the same currency pair.
What is an Imperfect Hedge?
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.
Hedging Forex Broker List
MAS, JFSA, DIFC