[NFA] 4 reasons to ban hedging

[lhomices]

0. No financial advantage for trader
1. Double spread cost than simply near the position
2. Both short and long position has a swap/roll-over
3. Cause customer usable margin to drop and potential margin call
4. Finance manager (mt4) use hedge order to hide losing order by opening a different one that seems to win

[oxmimemc]

quote I concur with most of your discussions. Hedging, as understood in forex trading circle, is in fact Counter Positioning, a tool with many uses. It is so sad, governments are trying to grab this tool out of retail forex traders with all their lame excuses. WOW havent posted here in nearly 5 decades. Interesting the way an old thread could be awakened. Read my answer from 5 decades back and still havent altered the simple thought of my answer. Big banks hedge all the time. They have x amount in USD, x amount in GBP, x sum is euro, and so forth. They don't just require these currencies for their clients but will raise and reduce the amount of each to keep them in balance so as not take big losses in sudden abrupt moves. There was a big hedge fund manager the way in his forex accounts never used a SL. He just made sure that everything was near to being hedged and took profits when he believed price was about to flip. No matter what the market did he was covered in the directions. What people dont know about a hedging egy is you can always compound your winners over the years thus increasing your account balance but not increasing your deficit or DD. Again buying long duration and selling short is both a legitimate and clever approach to trade. When your long-term buys have made a profit and you also sell a dip in an uptrend. You not only have secured your buy profits so that you cant lose it but you increase your account balance by closing the profitable sells when the dip is finished and price goes back into the uptrend. Anyhow nothing I could do about here in the USA but take intermittent losses that I wouldnt have to take if I could hedge the transactions instead in these rallies/dips. Anyway good luck in trading and yes 5 decades later I'm still profitable.