Simple Forex Hedging Strategy

This is my first post about a strategy that I am willing to share and it’s the perfect choice for a newbie to try and experiment. 

Basing on the name of this simple method which is “Hedging”, it means that you are going to set two separate orders that will negate both of your profit and loss. 

You won’t be losing on this condition no matter where the direction of the market trend but you won’t either generate any profit.

This strategy is one among the most popular method being shared and discussed as well on various forums. 

You might have already encountered this proven technique basing on some trader’s feedback about the system. 

And if you are and you have great knowledge about it then I wish that you are willing enough to share your success regarding on how you are using it properly to gain profit. 

The comment form below is always open for everyone to let their opinions, additional information about the topic and any other concerns relating to the main subject of the post.

The following steps are the procedure on how to use the hedging strategy:

1. Open two orders at the same time. You need to be fast when you are going to use the “Market Order” function of your trading platform. 

A slow internet speed connection could be a problem where the result of your two orders could have a huge gap between them. 

Take note that the closer distance that you are able to open both trades are better.

2. An alternative option when you have a slow internet speed connection is to use the “stop order”. 

This function will allow you to set a certain level of price where the market might trend or touch triggering your both orders. 

The only drawdown is when the market trend has never touched that price and your orders are not triggered. Anyway, the best solution for this is to set a price nice the current price level.

3. After setting up those two trades, the next thing that you have to do is to wait until those two orders have achieved a total pip of 100 or even more. 

You can try a smaller amount of target but I find the best results on using a larger range of distances.

4. Finally, there’s a huge movement and let’s say that it moved around 100 pips. You now have on your winning side a worth of +100 pips (minus the spread) and -100 pips (minus the spread). 

Close the losing side and then re-open another group of hedge performing the same action from the previous steps.

5. We need again to wait until a movement occurs and when it happens that the previous losing order (not the newly opened sets) had returned back into its original position or gained a few positive pips then you have to close all active orders. 

You have already earned some profit on this condition and you can have rest to trade on the next day.

Forex Hedging Example

The only situation where you are going to lose on this forex trading strategy is when the losing side will continuously trend. I suggest placing a stop loss or a trailing stop to prevent further losses. 

Moreover, this is just the basic principle of the method and you can further tweak its system to provide more profitable returns with less risk of losses.