Investors hedge their trades to reduce the risk in case the market starts moving against them. For example, a gold commodity trader will offset a long position by purchasing a put option to hedge against a decline in the price of gold. Currencies, however, are traded in pairs, and the traditional hedging strategies are not that effective. Still, there are ways in which currency traders can hedge their open positions to protect themselves against an unexpected market move.

Hedge your existing forex trade by opening a new position in a correlated pair. Some currency pairs move in the same or opposite direction. Those that move in opposite directions percent of the time have a -1 correlation. Each pair acts as a hedge for the other no matter which way the market moves. Open a forex account with a brokerage firm that pays traders a positive rollover. Rollover is the interest a broker pays you for holding a particular currency trade overnight.

Buy the pair forex correlation hedging strategy hold the trade forex correlation hedging strategy how to input a character using joptionpane to collect daily interest on it.

Protect the rollover trade by opening a forex account with a different broker that does not charge for holding a short position overnight. Open a short trade in the same currency. By being both long and short in the same currency, each will cancel the other out no matter how the market moves. Open an account with a binary options brokerage firm and use binary options to hedge your forex trade.

Successful currency trading requires unique hedging strategies. Items you will need Online forex trading account. Warning Forex trading is very volatile and hedging strategies offer protection only against a portion of the loss.

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