Hi,
We all had positions going against us. Some traders like to put a hedge on same pair to protect themself.
Example :
Let say I buy EurUsd for 1.3800 and EU drop to 1.3700 then I'm down 100 pips. I read news and think EU will drop more so I open a Sell of EurUsd
So my account is now
Current price : 1.3700
EurUsd buy at 1.3800 ( -100 pips )
EurUsd sell at 1.3700 ( 0 pips)
Total = -100 pips
What I have done is closing my buy on the market in practice. Metatrader will show 2 trades. My broker see no trades on my account and also see a loss on my account.
What will now happens is broker will charge me swap on positions that I do not own.
Now I hear "Oh baby you are so wrong".
Lets play with our example some more.
Example price now is : 1.3650
EurUsd buy at 1.3800 ( -150 pips )
EurUsd sell at 1.3700 ( +50 pips)
Total = -100 pips
Example price now is : 1.3750
EurUsd buy at 1.3800 ( -50 pips )
EurUsd sell at 1.3700 ( -50 pips)
Total = -100 pips
So why do some traders hedge the positions ?
Close your positions and reopen when you feel you would have "open your hedge".
You will earn money because you will not be charged for the swap....
Enjoy your trading !
We all had positions going against us. Some traders like to put a hedge on same pair to protect themself.
Example :
Let say I buy EurUsd for 1.3800 and EU drop to 1.3700 then I'm down 100 pips. I read news and think EU will drop more so I open a Sell of EurUsd
So my account is now
Current price : 1.3700
EurUsd buy at 1.3800 ( -100 pips )
EurUsd sell at 1.3700 ( 0 pips)
Total = -100 pips
What I have done is closing my buy on the market in practice. Metatrader will show 2 trades. My broker see no trades on my account and also see a loss on my account.
What will now happens is broker will charge me swap on positions that I do not own.
Now I hear "Oh baby you are so wrong".
Lets play with our example some more.
Example price now is : 1.3650
EurUsd buy at 1.3800 ( -150 pips )
EurUsd sell at 1.3700 ( +50 pips)
Total = -100 pips
Example price now is : 1.3750
EurUsd buy at 1.3800 ( -50 pips )
EurUsd sell at 1.3700 ( -50 pips)
Total = -100 pips
So why do some traders hedge the positions ?
Close your positions and reopen when you feel you would have "open your hedge".
You will earn money because you will not be charged for the swap....
Enjoy your trading !
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