Excerpt from: Forex Training
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| September 24, 2008 | | You don't always have to hedge to limit your losses | One of the popular ways for traders to cover themselves is through hedging. This is when you place an opposite order to offset a losing position. However, this doesn't always work well.
For medium and long term currency trading, it can help to have an alternative to hedging. Forex Strategy Secrets describes a forex trading strategy developed by Wayne Jackson:
- Place a stop loss order on your position -- something of about 40 to 50 pips.
- Watch as the market goes against you.
- Allow the market to continue (perhaps your position loses between 30 and 100 pips).
- Put in an order for the same position as your stop loss position. Whether you are long or short, keep that position. This way you will benefit when the market turns around.
- As the market turns around, you are picked up and you ride the wave.
Obviously, as with any forex trading strategy, there are risks and this could totally backfire. But it is an interesting alternative to hedging, and could be useful for some traders.
| Topic Tags: alternative hedging, currency trading, forex strategy, forex strategy secrets, forex trading, forex trading strategy, hedging, Wayne Jackson | |
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