Hedge is one of the important techniques in forex. Thus, I feel it is useful to discuss it
There are different types of hedge:
1. Professional Hedge: When buying (or selling) two different pairs containing a single unit; e.g., EUR/USD and USD/JPY. This kind of hedge strongly needs fundamental analysis.
2. Common Hedge: When you buy (or sell) a single pair at the same time.
3. Urgent Hedge: When something is wrong with your order and you are losing more and more, you will open a position on inverse direction to avoid more loss and probably ending up your margin.
4. Long Hedge: When you keep a lost order for long time for the hope of retuning the market to the price you started (sometimes wise and sometimes stubborn); during this time you may wish to trade on the inverse direction only due to good opportunity, not the essence of hedge.
Could you please discuss these different types here, and why brokers hate hedge? [1]
[1] Brokers usually hate the second type of hedge, and do not allow traders to do this. But the software cannot recognize the type and will not allow you to do so in other cases. In some cases, it may lead you to significant losses. For this reason, I strongly recommend not to use brokers (even famous ones) not allowing hedge.
There are different types of hedge:
1. Professional Hedge: When buying (or selling) two different pairs containing a single unit; e.g., EUR/USD and USD/JPY. This kind of hedge strongly needs fundamental analysis.
2. Common Hedge: When you buy (or sell) a single pair at the same time.
3. Urgent Hedge: When something is wrong with your order and you are losing more and more, you will open a position on inverse direction to avoid more loss and probably ending up your margin.
4. Long Hedge: When you keep a lost order for long time for the hope of retuning the market to the price you started (sometimes wise and sometimes stubborn); during this time you may wish to trade on the inverse direction only due to good opportunity, not the essence of hedge.
Could you please discuss these different types here, and why brokers hate hedge? [1]
[1] Brokers usually hate the second type of hedge, and do not allow traders to do this. But the software cannot recognize the type and will not allow you to do so in other cases. In some cases, it may lead you to significant losses. For this reason, I strongly recommend not to use brokers (even famous ones) not allowing hedge.