Risk management in forex is one of the most important things. With good risks policy you'll never lose all your money. Hedging will help you with this not-so-simple task.
Let's open 2 charts - Eur/usd and Gbp/usd. They have strong correlation and if you want to trade on both of these charts you should keep in mind that openning orders in the same direction on both charts would almost twice increase your chances to lose your money. Of course with the chance to lose thse orders you could also win them.
Now let's try to open buy on Eur/Usd and sell on Gbp/Usd. That way you open hedging orders and highly lower your risks. This technique may be useful if you have separate trading systems for each currency pair. If one trading system tells you to buy Eur/usd and the other one to sell Gbp/usd you'll be protected and on the contrary opening both orders in one direction can worth a lot to your deposit. Try to avoid trading in one direction on strong correlative currency pairs.
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