Hedging

The word itself means by Name Dictionary: a fence or within an area of land or as a means to protect

Function: protection of the person for the same loss, or avoid the risk of commitment

In financial markets the term is used widely and used by investment houses and brokerage in building strategies and tools to protect the lawsuit to protect the funds of investors and thus attract investment.

In the currency market This is based, and there are two key principles of the term, the first is as mentioned above means the Governor investment content not to be subjected to losses posed by companies to attract investments

The other thing Alhdj or fence or the protection status as a strategy trading in the forex market / Forex.

Appropriate for beginning to learn that not all brokerage firms give this power to trade some of the reasons are: --

- Some companies see strategy trading is not suitable for virtually intact, but institutional traders experts.

- It's linked to keep the centers open for long days, which leads to practical accrued interest and because some companies want to set aside the rolling enter the circle of interest

That may become a high cost not to mention the issue of legality in that.

- Some companies see as a deceptive strategy of the trader had been drawn by a series, but a complex network of centers would not be able to deal with it simply.

How to get Alhdj Hedge or what is the process of Hedging.

When it opens a center and working to achieve status, the loss of rolling the opening of a counter so that it has two-way opposite, will not Regardless
Zer this trend now, the loss becomes installed on the number that has opened the second place because one of the centers will gain equal to the loss of other center would achieve an important change price.

Example:

A buy EUR / USD EUR / USD 100000 to the price of 0.9875,

The price has moved down to 0.9825 - the loss floating Floating Loss is $ 500

Here takes the rolling resolution (new center) and not the status of closure - opposite to the first.

Sale Center EUR / USD EUR / USD 100000 to the price of 0.9825

What is now the case:

- Loss of $ 500 fixed-Why?

- If the price moves to 0.9750 first place the second loss of $ 1250 profit $ 750 difference the loss of $ 500

- To Othrk price to 0.9975 first place won $ 1000 and the second loss of $ 1500 loss of $ 500 difference

Thus, regardless of price.

It is true that rolling now have fever or select the loss, but what is the way to get out of this situation:

Simplest option is to close the centers and the acceptance of loss, but working mainly practiced hedging because he does not want the loss is supposed to have a trading strategy

To deal with the situation and her heart to get rid of the profit or loss.