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Brokers For Hedging Strategy

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Hedging is when you open two trades in the same pair, which is equally sized but in opposite directions. Hedging, at least in theory, negates the need to set a hard stop loss on either long or short trades being hedged. The advantage of hedging is when the markets (especially Forex markets) tend to range most of the time, it can be possible to profit just from high volatility within a range by closing the long trade at a peak and the short trade at a trough.

Many brokers do not allow hedging, but some do. Brokers that allow hedging give traders the flexibility to buy and sell at once. By here, you will find some forex brokers that allow hedging for their clients.


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Trading indices has plenty of benefits for traders. Such as:

  1. Hedging
  2. Diversification
  3. Low cost
  4. Less liquidity risk
  5. Convenience

Continue Reading at Why Trading Indices Can Be Beneficial for You

Hedging in the same pair is done by opening a new position in the same pair you have already opened before. This is the simplest form of forex hedging strategy.

Say, you expected the USD/JPY to go down from 103.75 to 103.49, so you sell the pair. After a while, the price moves upward, even breaking the previous resistance of 103.87. Still, you are unsure whether the move is real or the price will revert downward later. You opened a buy position in the same currency pair to hedge your way. That is hedging. In addition to opening a new position to the opposing direction, you could add a stop loss to both orders up to a certain level to consider whether the direction is confirmed up or down.

Continue Reading at Introduction to Forex Hedging Strategy

In 2009, the National Futures Association (NFA), a forex self-regulating organization in the US, released a new policy called the Compliance Rule 2-43b, which basically eliminates hedging in forex trading. This new policy states that Forex Dealer Members (FDMs) and Retail Foreign Exchange Dealers (RFED) should not allow clients to hedge their trades and must offset positions on the First In First Out (FIFO) rule basis.

The FIFO rules mean that traders must close the earliest trades first in situations where there are several open trades of the same currency pairs and are of the same position size. Consequently, traders are not allowed to hedge and have two opposing positions of the same pair going on simultaneously.

Continue Reading at Why Is Hedging Not Allowed in Some Countries?

Here are some things to look for when choosing a forex broker for hedging:

  • Low spreads
  • High leverage
  • Good execution
  • Competitive fees

Continue Reading at Introduction to Forex Hedging Strategy


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