The concept of "hedging currency risks" is increasingly heard on TV or radio in the news and, as a rule, this term is related to economic news. Hedging - insurance against the risk of price changes by engaging in the parallel market the opposite position.

In addition, there is a forex trading strategy based on hedging. The hedging strategy is the commonality of certain hedging instruments that allow to reduce price risks. Do you want to trade the method of hedging in the Forex market? Then you in the investment hedge fund! Genesysfund offers the most favorable conditions.

In general, many strategies include elements of lowering price risks. They are based on parallel movement of the price and the futures price that allows in the urgent market to lower losses in the market of the real goods.

Even briefly acquainted with the information above, you can understand that this is a far from simple tool, but very effective, which is used in trade.

The initial role of options was to insure the market participant. Option markets developed, and hedgers wishing to insure their positions formed a small percentage of players. Despite the fact that arbitrage spreaders and speculators on the market are much larger, hedgers are still an important part of the relationship, and any experienced market participant needs to know what strategies they use to protect their positions.

Most hedgers, when entering the market, use a natural short or long position. In the course of their activities, they receive income either from growth or from falling prices for a particular underlying instrument. The producers of goods (oil, cereals, jewelry and. ) a long natural position works, with an increase in the price of the goods, an automatic increase in revenue from its sale. Consumers of goods use a short position when the price of a product falls, they buy it cheaper. The financial market has short and long positions. So their growth for creditors will be beneficial, unlike borrowers. With falling interest rates, the effect will be directly opposite.

The remaining potential hedgers participate in market relations, in order to take a short or long position, to shift part of the resulting risk to someone else.

Speculators who occupy any position in a particular contract are given the goal of temporarily lowering the positional risk. For example, a portfolio manager receives a reward for choosing profitable shares for a portfolio. He becomes a long position voluntarily. If the manager wants to own shares, but suspects that their price will soon fall, hedging his position in stocks using options or futures will cost him less than selling shares and their subsequent buying.