What Is Hedging ?
Basically, hedging involves the buying (or selling) of currency pair(s) in order to protect the hedger against unwanted currency fluctuations. Traditionally, hedging was used to protect the profits of multinational companies from unfavourable currency fluctuations.Hedging is a great way for these companies to protect their profits, but unfortunately many inexperienced Forex traders have incorrectly applied the same principles to their trading activities.Here’s how a Forex trader may try to hedge his position:Imagine that I buy the EUR/USD currency pair, and the market immediately moves against my position (i.e. prices went down). At this moment, I would be facing an unrealized loss. In order to ‘protect’ myself against further losses, I might sell the EUR/JPY currency pair in the hopes that any gain in the latter pair will partially offset the losses of the former pair.Essentially, I’ll be holding on to two simultaneous ‘long’ and ‘short’ positions for the Euro currency. Hedgers hope that the results of both positions will partially cancel each other out.
Why Hedging is A Bad Idea for Retail Traders ?
This method of hedging is a deathtrap waiting to spring. The original purpose of a hedge was to reduce the uncertainty of company profits.To the retail trader, however, this does the exact opposite!Such a hedging strategy simply leaves too many factors open to risk. Although the Euro price fluctuations may be some what muted, the ‘retail hedger’ now has worry about the USD and JPY currencies too! The EUR/USD and EUR/JPY pairs are not highly correlated and may end up causing an even larger total loss in the end.Many people like to hedge because they don’t want to admit that they made a bad trading decision. They try to ‘safely’ hold on to a losing position for as long as possible in this manner, but don’t realize that they’re actually exposing themselves to even greater risks!
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Following is a brief description of the types of basic orders that can be placed in the Forex market:
Market Order
A market order is an order to buy or sell at the current market price. For example, EUR/USD is currently trading at 1.2045. If you wanted to buy at this exact price, you would click buy and your trading platform would instantly execute a buy order at that exact price.
Stop-Loss Order
A stop-loss order is a limit order linked to an open trade for the purpose of preventing additional losses if the price goes against you. A stop-loss order remains in effect until the position is liquidated or you cancel the stop-loss order. Stop-losses are extremely useful if you don’t want to sit in front of your computer all day worried that you will lose all your money.
Other Order Types
GTC (Good ‘til canceled)
A GTC order remains active in the Forex market until you decide to cancel it. Your broker will not cancel the order at any time. Therefore it is your responsibility to remember that you have the order scheduled.
GFD ( Good for the day)
A GFD order remains active in the Forex market until the end of the trading day. Because the foreign exchange is a 24-hour market, this usually means 5:00 p.m. EST since that is when the U.S. markets close, but you need to double check with your broker to determine the exact time of the end of the trading day.
OCO (Order cancels other)
An OCO order is a mixture of two limit and/or stop-loss orders. Two orders with price and duration variables are place above and below the current price. When one of the orders is executed the other order is canceled.
Example: The price of EUR/USD is 1.2020. You want to either buy at 1.2075 or sell at 1.1965. If the OCO order reaches the 1.2075, you will buy and the 1.1965 sell order will be automatically canceled.
The speculator aim in Forex trading is to profit from the movements of foreign currencies. The price of currency pair is referred to as a "Forex rate" or just "rate" for short. The proof that forex is really good investment option we need to compare it to other similar solutions. At its very minimum, the return on investment in forex should be compared to the return on the so called "risk-free" investments. Classical example of a risk-free investment is the 
If you are trading currencies, it is advisable to trade only when your expectations are that currency you are buying is going to increase in value compared to the currency you are selling. If it happens, you should sell back the other currency in order to lock in a profit. This open trade (sometimes called “open position”) is a classical example of trade in which the player has bought or has sold a particular currency pair and relatively has not yet sold or bought back the equivalent amount in order to close this position.
Forex Market Strategy
Financial Forex market is a popular place to trade world currencies for specialized traders, brokers and individuals who want to earn money online. At online Forex market anyone can get a financial success with the help fundamental knowledge, continuous training and business luck. Briefly speaking Forex market strategy is a method of using currency exchange rates from different countries to buy one country's currency when it is undervalued and exchange it for another country's currency when it is of normal or higher value. By using Forex market strategy you will get profits from the difference of currency exchange rates.
Our managed Forex day trading system will help you to raise your business profits, increase financial success of your company and personal income. But before you decide to try managed Forex trading strategy in practice and invest in foreign exchange real money, we strongly recommend you to determine your investment purposes, level of experience and possible risks. Before using managed Forex trading strategy you should be well informed about all risks associated with foreign exchange trading and in case of any problem consult with our financial advisors.
You can start trading on financial Forex market from everywhere you want: your home, office and even on the road with your mobile phone. Install financial Forex market platform on your computer and begin to earn money.
Register any Forex trading account with us and we will provide you with top-notch customer support and high level services to help you follow your chosen Forex market strategy successfully.
Professional Forex Trading
Sigma Forex is here to provide powerful and reliable Forex trading platform with no compromise on integrity and functionality that is easy enough to be used by beginners and yet sophisticated for professional Forex traders. We try to deliver you Forex professional system trading to ensure your trading experience is comprehensive and hassle-free.
Forex professional system trading seems to be rather easy to start your online career at, but there are plenty of difficulties and risks involved which you won't be able to fix on your own without the help of professional Forex trader. Whether you have no or little experience in Forex trading field, don't know how to wisely manage your capital, you can take all the advantages of expert advices that our professional Forex traders can give you. Professional Forex trading platform from Sigma Forex performs well for individual traders and small businesses by focusing on what individual foreign traders want and need to assess the highly-liquid, 24-hour currency marketplace without risking more than their account balance.
Nowadays Forex market has turnover of more than three trillions dollars a day which is by order the greatest turnover on the world's financial markets. Forex professional system trading allows you to operate through a global network of banks, corporations and individuals trading one currency for another. In fact, we, as reliable and professional Forex trader, offer you efficient Forex trading software included in every trading account.
Trading Strategy - Pre-trading shorts?
The SEC rule change on short-selling forces speculators to borrow shares before shorting them. This all but eliminates day-trading on the short side. Seems likely to be viewed a positive for a bear market but like all rules the unintended consequence will be to eliminate liquidity in shares just as the market wants it and the short-squeeze will be less dramatic. While calming markets down is the first order of business that Bernanke made clear in his testimony – the second order is inflation and today’s US CPI will be key in allowing all the other things that need to be fixed the key ingredient – time. FX markets actually took center stage overnight – with both CHF and JPY gaining again – but not purely against the USD. The article in the WSJ coupled with the CPI reports today show that Europe suffers as much as the US. The failure in Spain of the biggest real estate developer should be a wakeup call for the EU. Further ECB hikes due to inflation targets will be meeting more resistance from politicians. Bernanke won’t be alone in his rock or hard place dilemma. The US data today may actually help stabilize the market more than any new regulation - first the TIC data may show that the world still puts money into the US enough to finance its deficits, second the IP data may not be horrible enough to show a clear recession in manufacturing, third Congress may be able to support Bernanke in his second round testimony by suggesting more stimulus. Overall, the bears should be a bit worried today – and that may be good for the USD but better for the crosses. Key for USD will be 103.70 JPY – the voodoo of the cloud point, but more interest overnight in EUR/CHF and EUR/JPY may be the driver linked to equities. With oil down, gold down, the USD may hold well in a dull range allowing some respite from the volatility that destroyed risk-taking over the last week.
