rebateforexbroker rebateforex market the worlds largest trad rebateforexfeeg market in doing foreign exchange trading, foreign exchange hedging transactions Forex Rapid Rebate a relatively common transaction today to introduce you to the details of foreign exchange hedging transactions, I hope cashback forex have some help for your speculative foreign exchange 1, so what is hedging? Hedging:   while long ForexRapidRebate short the same species, this method of foreign exchange trading is called hedging or locking the intuitive effect of the two directions of the position of the floating profit and loss will offset each other, so that the risk exposure of the account is reduced For example, an import company in Japan to order a refrigerator production line Japanese offer 1.2 billion yen, at one dollar to one hundred and twenty yen, equivalent to ten million dollars import company worried Future delivery, the yen appreciated significantly, the real price has the opportunity to become $ 11 million or even $ 12 million, so the contract with the Japanese side, immediately in the bank to one dollar to one hundred and twenty yen exchange rate to buy the equivalent of $ 10 million of yen futures so that, even if the yen later how to appreciate significantly, the production line to pay for the delivery of the dollar can be paid back in the yen futures contract as much as possible, so that the company does not lose budget. Not to lose budget this approach is hedging finance, hedging refers to deliberately reduce the risk of another investment investment it is a way to reduce business risks while still being able to profit in the investment. The reason for this is that the worlds foreign exchange markets are calculated in U.S. dollars all foreign currencies rise and fall in U.S. dollars as the relative exchange rate dollar strong, that is, weak foreign currencies; strong foreign currencies, the dollar is weak dollar rise and fall affect all So, if you are optimistic about a currency, but to reduce the risk, you need to sell a bearish currency at the same time buy a strong currency, sell a weak currency, if the estimate is correct, the dollar is weak, the strong currency bought will rise; even if the estimate is wrong, the dollar is strong, the currency bought will not fall too much to sell short the weak currency but fell heavily, made less to earn more, overall still profitable 2, the hedge The role of a lot of investors to lock as a way to lock risk, in their own confusion about whether to hold or should be closed, the lock operation, in fact, this is a bad habit about trading a maxim is: when the direction is not clear, you should leave the field and watch, so if the lock because of confusion, then we should see the confusion as a reason to close the position, close the position out of the field, rather than lock themselves Most traders in the market for the lock transaction will be seen as two separate transactions and make investors pay double the transaction costs with the lock method instead of closing the position, which is also very attractive to newcomers, because the lock will make people feel that they are trading, they are participating in the market, rather than wandering out of the market, this feeling of participation is the psychological needs of many newcomers, traders also take advantage of this In fact, the NFA banned the locking feature precisely because of the additional transaction costs it may cause to investors. If the account does not have a locking feature, then the orders in opposite directions will cancel each other out and the strategy will not work properly