Hedging is basically a way for a forex trader to be safe. It is a way for him or for her to protect him or herself from getting hurt with a big loss. Hedging is basically a plan like insurance. In insurance, People can take breathe freely because they know there is the way that they can reduce their loss with. Hedging is just like that plan. When you are in a business then there is always a chance that something bad would happen. Hedging works in those scenarios. If you want to make your business more secure then you can go for hedging.
Experts say that those who do not know the market procedures and up and downs should not go for hedging as it is a risky process. If you are a newbie in this zone and are trying to play with hedging without having adequate trading experience in forex then it is almost sure that you will face some narrow situation. That is the reason why everybody does not accept hedging in their area. We are different and we have this facility for you.
There are two styles of hedging which one may choose. One of them is simple forex hedging and the other one is complex forex hedging. It is tough to understand for new comers which one works like how.
Direct hedging means a way when even if you are allowed to go for a trade which only buys a currency pair at a time and then at the same time you can easily put up a trade which will sell that same pair. In this case the profit will be nil and also because of having both of the trades open, you can easily make more money without taking additional risk only if you can time the market rightly. Simply it means that you are trading in the opposite direction of your previous trade. So, it is very tough to control the timing and go for it. But if you can do it then it is sure that you will be benefited.
Complex hedging is banned by most of the brokers and there are valid reasons also behind their doing this.
When you have become forex trader, you can go for against a particular currency problem while you force to use two different currency pairs. You can see an example, if one could go along with BDT or USD long and USD or Euro short then in this case, it will not surely be the exact but one can be hedging one’s USD exposure through this way. This is what is called a complex hedging. There are huge risks in this method and that is why it is prohibited in most places. We want the success of each and every trader of us and that is why it is needed to make you understand everything so that you can easily shine.