Hedging can be a useful tool to the Forex trader. When you have an open position, for example, you are long on a USD/JPY trade and you right click your trade on the VT platform, a menu will pop up and you have a choice to Hedge your trade. If you click Hedge, you will automatically open up a position in the opposite direction at the current market price without canceling out your other position and without margin increase!.
Hedging a losing trade won’t solve your problems, but it will keep you from more losses, give you time to think about what happened to your bad trade and give you a second chance. Some traders will hedge losing trades instead of stopping out there position, because they have a chance to win back the losses of the original bad trade
You may also hedge a winning trade to protect your gains, if you don’t want to completely close your position. When you do this you won’t gain or lose any more money with that position. The advantage to this would give you the opportunity to keep trading those positions in the future and give you a break
Hedging a losing trade won’t solve your problems, but it will keep you from more losses, give you time to think about what happened to your bad trade and give you a second chance. Some traders will hedge losing trades instead of stopping out there position, because they have a chance to win back the losses of the original bad trade
You may also hedge a winning trade to protect your gains, if you don’t want to completely close your position. When you do this you won’t gain or lose any more money with that position. The advantage to this would give you the opportunity to keep trading those positions in the future and give you a break
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