Forex Hedge Trading

The ultimate goal of hedge trading is to never have losses.
This is achieved by opening two simultaneous opposite positions either on the same currency pair or on correlated pairs.
For example, what will happen if Buy GBP/JPY and with another order Sell GBP/JPY?
Your net total will be zero, no matter which way the market goes.
(You still, however, need to pay the spread for each open position and also there will be rollover charges if you keep orders over next day – all this at your own expense).

There are various hedge strategies being used in Forex. Let’s review those we know:

1. Profiting on rollover:
If you check with your broker, you’ll find that there are currencies that are credited positive rollover each day (when you Short or go Long specifically). Hedge traders are interested in working with such pairs in order to collect rollover profits every day.
The most popular and profitable pair for capitalizing on rollover is GBP/JPY when bought.
The strategy hedge traders apply is: they use 2 brokers, where one broker is charging rollover each day and the other doesn’t charge any rollovers. Then traders open Buy order for GBP/JPY with a broker who pays rollover, and thus collect daily rollover profits; and simultaneously open a Sell order with another broker that doesn’t charger rollover (when GBP/JPY is Sold the rollover each day is negative, that’s why it is important to have a broker who want charge rollover). In total, hedge traders end up with BUY and SELL orders for the same pair, which cancel each other, hold positions for indefinite time and earn positive rollover every day.

2. Hedging with correlated pairs:
Some currency pairs have strong correlation. More on correlation here:
In simple words, there are currencies that mirror each other as they move.
For example, if you look at charts of EUR/USD and USD/CHF pairs, you’ll find very close similarity in the graph patterns (in fact the effect will be that EUR/USD is moving inversely to USD/CHF).
What does it mean to hedge traders? It means they can use this similarity in moves to try to cover up losses and built a hedging strategy that would combine those two currency pairs.
Since EUR/USD and USD/CHF move inversely one can BUY both pairs. The result again will be – one order will gain profit, another will go in loss, they’ll cancel each other.
Then you may also add mechanism of closing profitable trades and rollover and work out a profitable hedge strategy

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FOREX SUPPORT AND RESISTANCE TRADING:

Support and resistance trading is considered to be one of the most effective ways of Forex trading since it is based on the primary source of information -market price itself.
The basic understanding of support/resistance trading could be described as follows:
Once price reaches certain level at which some market reaction (price stop, price reversal etc) was seen in the past, it tends to produce certain reaction again. If traders are able to correctly anticipate this reaction, they will be able to benefit from market activity when price reaches support and resistance levels.

Support level means that upon reaching certain price the market is expected to find a new push from Buyers, who will try to drive price up.
Resistance level means that upon approaching it from below the price is expected to stop (temporarily or permanently) forced by Sellers' pressure to move back lower again.
How to spot support and resistance levels on the chart?
Let's first of all name several most commonly used methods and studies that help to identify support and resistance areas:
- price patterns
- trend lines
- moving averages
- pivot points
- fibonacci levels
Price patterns:
If you look at charts, you'll find that price moves in waves. The points where price stops and reverses, creating a wave is a natural support or resistance level. (Support - for all price activity which happens above the mentioned level, resistance - for all activity happening below that level).

Famous price patterns traders watch for are: double top/bottom, triple top/bottom, head and shoulders. You may google those terms to find out about specific price patterns and the ways to trade them.
Trend lines - are natural ways to determine the intensity of a trending market and find the slope it travels with either up or down.
Trend line represents support/resistance level as it extends in the future

[ForexGen Money Manager]

An individual who is responsible for the entire financial portfolio of another individual or another entity. A money manager receives payment in exchange for choosing and monitoring appropriate investments for the client.

Benefits of being a Money Manager with [ForexGen]:

* Providing three different commission sources.
* Weekly commission plan.
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* Fixed percentage of the profits.
* P = k * D “P=Profit, k=Variable Parameter, D=Deposits”

The money manager gets a fixed percentage of the profit previously agreed upon with the client for managing the client funds as a bonus feature.

The most competitive trading conditions:

* 2 pips spread on six currency pairs.
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* Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.