Hedging

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doaausef3li
Posts: 3
Joined: Thu Nov 22, 2018 4:42 am

Hedging

Post by doaausef3li » Thu Nov 22, 2018 4:46 am

Stuck in endless hedging is not the peak of all risks that can occur when you hedge. The biggest risk is of course there is when you are wrong in the process of opening hedging. Basically there are 3 possibilities that can occur after you release hedging: profit, loss, or break even. Regarding this, the following simulations can occur:
1) Incorrect Determination of Timing
In releasing a hedging position, timing is the most important element. Unfortunately, timing is also the most common mistake in opening hedging. Generally, timing errors occur because a trader panics when prices suddenly move against his position. This panic can also be continued until when removing the hedging position.
If the action of opening hedging is done when the timing is right, at least the benefits and losses will break even or breakeven.
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2) Incorrect Opening Position

doaausef3li
Posts: 3
Joined: Thu Nov 22, 2018 4:42 am

Re: Hedging

Post by doaausef3li » Thu Nov 22, 2018 4:47 am

In addition to timings, the wrong release of a position is also an error that often occurs by traders. Most traders in particular do not understand how to remove hedging. They only have the knowledge that hedging can lock the loss they are experiencing at that time. This lack of knowledge is even accompanied by a sense of laziness to learn. Often also, the mistake of releasing a position arises because of advice from the abusive Fund Manager.
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Both position and timing are equally important. Even though the position that was released was the correct direction, but if the timing of the release was not correct, the loss could be even more swollen and even cause Margin Call or Stop Out.

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