Isaiah Thomas S_ Davis#86

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What is hedging strategy in forex and how is it implemented?

Hedging offsets risk by holding positions that counterbalance exposure. Direct hedges involve taking opposite trades in the same pair; indirect hedges use correlated pairs like EUR/USD vs. USD/CHF. Institutions hedge systematically to manage portfolios or corporate exposures. Retail traders use it to protect trades during news events. Benefits: reduced volatility and capital protection. Risks: increased costs, reduced profits, and complexity. Hedging is not a substitute for risk management—it complements it. For traders, hedging ensures survival when uncertainty is high, but only if applied with discipline and clarity.