Hedging in FOREX
If you want to have a strategy that can keep you in a winning side, then you should know the importance of stop-loss orders. If you fail to use stop-losses, then there is a greater chance that your trading will also be a failure. If you open position without stop-loss, your entire deposit becomes your stop-loss. And it’s clearly a stupidity to risk the entire deposit just because of a single trade.
On the other hand, stop-losses make you nervous, and may cause large draw downs, if you catch several stop-losses in a single row. When you are stuck in the middle of a large draw down, your become depressed, and stop thinking in a rational way. And you might even make the situation worst when you start all over again to “adjust” your strategy “on fly”. That is actually the problem with stop-loss orders.
Fortunately, there is another way of limiting losses in FOREX. And considering that you are taking advantage of an alternative system of limiting your losses, then you are not required to use stop losses. Exit a loosing position with a planned loss and do not wait at the point when “you’ve had enough” so that you are still good to go with anything.
There are individuals who are not setting stop-loss orders and will be closing the loose positions by time or on the next correction. But this method ended me up with larger loss than what I originally planned, so I realized that this approach will not really work well.
And my trader’s life was finally change when I discovered hedging. And currently, I close the majority of my loosing positions with a zero loss or with a profit. Wanna ask as how I did it? Alright… Its very easy… You can rather set a hedging order in the opposite direction at the stop-loss target point instead of setting a stop-loss order.
Your hedging order opens a new position in the opposite direction fixing your losses if market moves against your open position.
You can close both positions in such a way that the collective loss will become zero when market flats out.
You may also click on the button below to watch my video tutorial if you want more details on how exactly it is done.
