Forex hedging journal

that works 1 out of 5 - 10 times. this correlation is all but dead.

 

Hedging example

• You live in Europe and would like to travel to Britain sometime in the future.
• You can't take the risk of the EUR tanking against the GBP.
• Sell EUR/GBP and hold until your trip.

 

Prophylaxis from this thread.

 

It looks like the vultures who enjoy giving ET a bad name are coming out again. Its good everyone's post is recorded for anyone to look at in the future. Stay on topic or go to another thread for your amusement.

If there are any serious forex hedgers who would like to partake in discussion, please do so,

 

You're short the synthetic EURGBP. Are you confused?

 

Not confused -- thanks --

looking for next hedge for next week now, cheers.

 

I am only going to hedge GBP/USD with EUR/USD for now.

Stop loss at 100 pips. Profit targets - 50, 100, 150.

New entry: 02/24/08 20:06

Sell GBP =1.9669

Buy USD =1.4830

 

I'm going to try to explain this to you real clearly, and please try to understand to avoid looking dumber than you already do.

There is no such thing as hedging in forex except to do what forex-forex mentioned.

When you are long GBPUSD and short EURUSD, you are net flat the US Dollar. You are long GBP and short EUR, making you net short EURGBP, synthetically. That's it. There is nothing beyond that. However, instead of paying 1 spread, you paid 2. The brokers, on the other hand, love you! You are a broker's dream. No speculative position, yet you still want to pay them commission.

Also, you hear often from amateurs of being both "long" and "short" the same currency pair at the same time. This also does not exist. You are merely reducing your bigger position by taking a position in the opposite direction.

I understand this is difficult for newbies to understand, but you are best not to argue with people who know much more about the subject than you do.

 

^^^^^^^^^ Spot on

 

That's not quite it. He has a big exposure to the Dollar. He is long EURUSD and short GBPUSD. Suppose the USD falls 0.5%. Then his GBPUSD position will rise about 100pips and be stopped out, while his EURUSD position will rise about 75pips reaching only his first profit target. It's worse if he's gone with equal lots of each because the GBPUSD position will be larger. This is much more risky than simply buying EURGBP.