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The Forex Edge by James Dicks

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CHAPTER 23HEDGING STRATEGIES

Every trader’s portfolio should include several tools for its protection. Among them, diversification of assets is paramount, and it allows an additional practice: hedging as a means of locking in profits or reducing the risks of loss in the trading account.

In all aspects of my trading, I use various methods of trading. Prior to some of the most recent regulatory rule changes, one could hedge on both sides of a trade. What I mean by this is that you could have gone long on the EUR/USD and short the EUR/USD. This would have given you a perfect hedge. Now, you basically have to find correlated currency pairs to put an effective hedge down. There are, of course, downsides to hedging along with positive attributes. We ...

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