Simple Hedging:
This strategy involves buying and selling an equal amount of the same currency to offset any potential losses from an unfavorable price movement in that currency.
Multiple Currency Hedging:
It involves holding multiple currency positions to reduce the overall risk of the portfolio. When a trader is holding a long position in one currency, and may also hold a short position in a different currency that is negatively correlated with the first currency. That is one application of multiple currency hedging.
Options Hedging:
Hedging strategy involves using options contracts, such as call or put options, to hedge against potential losses. For example, a trader may purchase a put option on a currency that they are holding a long position in to protect against a potential decrease in the price of that currency.
Futures Hedging:
This strategy involves using futures contracts to hedge against potential losses. For example, a trader may enter into a futures contract to sell a currency at a fixed price at a future date, which protects against a potential decrease in the price of that currency.
Please, note that while hedging strategies can reduce the risk of loss, they can also limit potential profits. It’s essential for traders to carefully consider their goals and risk tolerance before implementing any hedging strategy. I sincerely recommend you consult with a financial advisor or professional for personalized advice. And NextGen Academy instructors are institutional traders that can guide well into profitable hedging institutional forex strategy. Getting a package with 100% assurance will also give you access to this strategy in a very simplified format. You want to signup and get a package today.
