Our team has over 7,000,000 traders!
Every day we work together to improve trading. We get high results and move forward.
Recognition by millions of traders all over the world is the best appreciation of our work! You made your choice and we will do everything it takes to meet your expectations!
We are a great team together!
InstaSpot. Proud to work for you!
Actor, UFC 6 tournament champion and a true hero!
The man who made himself. The man that goes our way.
The secret behind Taktarov's success is constant movement towards the goal.
Reveal all the sides of your talent!
Discover, try, fail - but never stop!
InstaSpot. Your success story starts here!
Hedging denotes safety and security. Hedging is protection of client's funds from unfavorable currency rate fluctuations. Account funds are fixed at their current price through conducting trades on Forex. Thus, hedging helps to ease exposure to currency rate change risks, which helps to achieve result not influenced by fluctuations.
In fact, hedging presupposes using one instrument in order to lower the risk related to unfavorable market factors impact on the price of another one directly associated with it. More often, the notion ‘hedging’ means insurance from the currency price fluctuations, assets etc. Hedging can also be considered as a type of investment allowing to minimize the price movements risk in the market. The hedging cost should be valued with regard to possible losses in the event of refusal from it.
Hedging types on Forex
The first type is hedging the buyer’s money to lower the risk of possible increase of an instrument price. Another type is hedging the seller’s money in order to lower a price drop risk.
Hedging example
A trader, who imports foreign currency, opens buy trade with a currency on his trading account in advance, and when the real time of currency purchase comes in his bank, he closes the position. And a trader, who exports foreign currency, opens a sell trade with a currency on his trading account beforehand, and at a real moment of this currency purchase in his bank, he closes it.
There is a so-called hedging mechanism, which implies obligations balancing in the currency market (or securities market etc.) and the opposite futures market. To hedge capital losses from a particular instrument, the position is opened with another instrument, which can compensate financial losses.
