What is a Hedge?

[emir]

When an exact hedge is applied, meaning that you buy and sell the same amount of the same currency, your net position in the market is zero . You are buying and selling the exact same thing at the exact same time, so it doesn't matter which way the market moves, the gain in one trade will be exactly offset by the loss in the other trade

[biyen]

Hedging is seen as a safety net for many Forex traders. Should the market move against them, the impact on the trading account will be less severe than if they had held the position un-hedged. Another important thing to consider is that many Metatrader EAs are programmed to use hedging to offset risk

[forexstudentforever1]

When a currency trader enters into a trade with the intent of protecting an existing or anticipated position from an unwanted move in the foreign currency exchange rates, they can be said to have entered into a forex hedge. By utilizing a forex hedge properly, a trader that is long a foreign currency pair, can protect themselves from downside risk; while the trader that is short a foreign currency pair, can protect against upside risk. Read more http://www.investopedia.com/ask/answ...#ixzz1lvmhFCiI

Thanks a lot for sharing your thought. I have read that whole article which is in your link.

[ossama]

Trade is a very risky the hedge is may not to be held deals of this kind without the study and a good plan

[nahial]

Hedging is often considered an advanced investing strategy, but the principles of hedging are fairly simple.

[syahroni]

I think a hedge is simply opening two positions inopposite directions with the hope of making profits from both position.but i dont like hedging as it makes me feel unhappy always due to one trade losing always .

A hedge fund is an investment fund that can undertake a wider range of investment and trading activities than other funds, but which is only open for investment from particular types of investors specified by regulators. These investors are typically institutions, such as pension funds, university endowments and foundations, or high net worth individuals. As a class, hedge funds invest in a diverse range of assets, but they most commonly trade liquid securities on public markets. They also employ a wide variety of investment strategies, and make use of techniques such as short selling and leverage.

Hedge funds are typically open-ended, meaning that investors can invest and withdraw money at regular, specified intervals. The value of an investment in a hedge fund is calculated as a share of the fund's net asset value, meaning that increases and decreases in the value of the fund's assets (and fund expenses) are directly reflected in the amount an investor can later withdraw.

Most hedge fund investment strategies aim to achieve a positive return on investment whether markets are rising or falling. Hedge fund managers typically invest their own money in the fund they manage, which serves to align their interests with investors in the fund.[1][2] A hedge fund typically pays its investment manager a management fee, which is a percentage of the assets of the fund, and a performance fee if the fund's net asset value increases during the year. Some hedge funds have a net asset value of several billion dollars. As of 2009, hedge funds represented 1.1% of the total funds and assets held by financial institutions.[3]As of April 2012, the estimated size of the global hedge fund industry is US$2.13 trillion.[4]

Because hedge funds are not sold to the public or retail investors, the funds and their managers have historically not been subject to the same restrictions that govern other funds and investment fund managers with regard to how the fund may be structured and how strategies and techniques are employed. Regulations passed in the United States and Europe after the 2008 credit crisis are intended to increase government oversight of hedge funds and eliminate certain regulatory gaps.[5]

[hmkowsar]

i feel it shows that we arent sure about the market and movement and we are guessing of the direction and this can be dangerous.

[Sri Hartono]

Hello Everyone, the main reason that you want to use hedging on your trades is to limit risk. Hedging can be a bigger part of your trading plan if done carefully. It should only be used by experienced traders that understand market swings and timing. Playing with hedging without adequate trading experience could be a disaster for your account.Thanks.

all right, but not all businesses are going to do a risk. there are key words to success: the greater the risk of a business, the greater the benefits that can be generated. here we need to do is understand the risks to be faced.

[ahsankhan]

Hedge Definition: A Hedge is a trading strategy whereby an investor seeks to reduce the risk of an adverse price movement on a security, commodity or currency that he owns in one market by taking a position or combination of positions in other markets. This "hedging" practice began when public futures markets were established in the late 1800s to allow for efficient price protection in the agricultural commodity markets. The risk mitigating process has expanded over the years to include futures contracts for hedging currencies, precious metals, energy, and interest rates. Although futures contracts are the most popular medium for hedging strategies, other vehicles typically used are forwards, swaps, options, insurance policies, and many types of over the counter derivative products. An investor will use this strategy if he is unsure of what the market may do and wants to protect his downside risk. Setting a forex stop-order is not necessarily considered a "hedge" since it can be accomplished in the same market, yet it does mitigate downside risk. Hedging requires a cost-benefit analysis since hedging instruments do require premiums and commissions or spreads to be paid. Typically, an investor knowledgeable in options will sell a call option to offset the cost of buying a Put option. The Put guarantees downside protection and potential for gain, while the Call limits the upside, thereby "locking in" a profit on the security or currency.

i just want to warn you all from this thief adnan alamayeh he managed one of my accounts and made me lose over 8000$ is one night and promised...

[rihabrahouba741]

The hedging is very positives trading performances and It prevents us from a very roomy loss and and lock ours littles profits. Often i would like to figures out prevarications but fails.The Hedging is not so at ease and trouble-free !!