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Excerpt from:  Forex Training
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November 17, 2006

Forex Training: Hedging

Hedging in currency trading
A hedge is when you attempt to limit your exposure in one trading position by taking an opposite position elsewhere. Hedging works in forex trading, and can be a tool to help you limit your risk when you make currency trades. It is possible for you to buy one lot of EUR/USD on the FX market, and then simultaneously hold another position to sell EUR/USD. Often this is done through a "hedge" option. The two currency trading positions are managed separately, and you can offset losses in one position with the gains from another.
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Topic Tags:  currency trading, EUR/USD, forex trading, forex tradining, FX market, hedging, trading position
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