Forex Trading Blog | Hedge your Investment?!
Forex Trading Blog | Hedge your InvestmentWhen people hear the word “hedge”, what comes to mind? A bunch of old guys on Wall St. with $5k suits that are Hedge Fund Managers? Yah that’s what I was thinking too. What most people don’t know is what the definition of hedging is, or what it means in the investing world. This will be the primary focus of our forex trading blog post for today. A hedge in its most primitive definition, is an action in which to protect yourself from risk. IE let’s say you think the world will run out of gas in the next year. To hedge this risk, you start to buy and store gas right now. Pretty simple right? Now our forex trading blog will talk about how this deals with Forex. Forex is known by most as the Wild West of investing. There are a couple of articles from our forex trading blog that talks about the massive risks (and also rewards) dealing with Forex. What a lot of critics don’t realize, is that Forex traders can actually hedge their risks. Wow!!!, Pop the champagne bottles and dump all your money into your Forex account? No, not really. Although you CAN hedge your risk you also have to know what you are doing. That in itself can take months (and maybe years) to get down to a science. Our forex trading blog can only go so far, it is up to you to make the next step. One of the most popular ways to hedge is by using Foreign Currency Options. Options are implemented in other types of securities, so if you are familiar with them that is awesome! For those that are not, we suggest you start reading up. We would like to think that hedging through Forex Options is a great weapon in the arsenal of trading tools. As with all Options, a Forex Option gives the trader the RIGHT, but not the obligation to either buy or sell a currency pair at a specific exchange rate sometime in the future. A word of warning, don’t expect all Forex brokers to have this option. We suggest you do your diligence and find the broker that would fit your needs the best. Hopefully our forex trading blog has helped you get the basics of hedging. We hope that you are soon dominating the market! Have any special tricks you would like to share? Let us know and we would be happy to feature you in an upcoming article. Our forex trading blog wants YOU, the readers for guest posts!
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