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Simple Hedging Strategy

A forex hedging strategy is a method used by traders to protect their funds from adverse currency exchange rate fluctuations. While it may seem straightforward in theory, this strategy presents a high level of difficulty in practice. This article presents steps for a simple hedging strategy that can be implemented by beginners.

Steps for Simple Hedging Strategy:

  1. 1. Pair and Time Frame Selection:

  • Choose well-known major or cross currency pairs.
  • Select a time frame indicating consolidative movements, such as the 15-minute time frame.
  1. 2. Trend Analysis:

  • Identify trends using moving averages or drawing channels on higher time frames.
  1. 3. Execution of Buy and Sell:

  • Execute buys and sells quickly, either simultaneously or using Stop and Limit Orders.
  • Let the price move and wait until orders move within a certain range.
    1. 4. Closing Losing Positions:

    • Close positions experiencing losses when the price moves according to the specified range.
    1. 5. Range Calculation:

    • Determine consolidation range based on the selected currency pair and time frame.
    1. 6. Strategy Implementation:

    • Assume the selected range is 10 pips.
    • Example: First buy +10 pips, Second sell -10 pips, Third buy +10 pips, etc.
      1. 7. Profit and Loss Determination:

      • Set take profit and stop loss levels for each position.
      • Calculate total profits and losses from all opened positions.
        1. 8. Repeat the Steps:

        • Repeat the above steps until the desired profit is achieved.

        Determining Range Basics in Simple Hedging Strategy:
        • Major Pairs (USD):

        • - Scalping (M5): 10-20 pips
        • - Intraday (M15/H1): 30-90 pips
        • - Swing (H4): 100-200 pips
        • Cross Pairs (EUR):

        • - Scalping: 15-30 pips
        • - Intraday: 40-120 pips
        • - Swing: 120-240 pips
        • Cross Pairs (GBP):

        • - Scalping: 20-40 pips
        • - Intraday: 50-150 pips
        • - Swing: 150-300 pips

        A simple hedging strategy requires a good understanding of the market, patience, and discipline. Despite the risks involved, with proper risk management, this strategy can help protect funds and gain profits. Remember that trading practices always involve risks, and past performance does not guarantee future results.


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