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Using Forex Signals for Auto Hedging

  • July 2015
  • Posted By Ninoslav

Forex markets are the biggest investment marketplaces in the world. Forex dwarfs every other type of investment category, including all the stock exchanges combined. That’s because international trade relies on forex to constantly update currency values so that goods and services can pass between countries without delays.

Forex Markets Affect Everyone

Even if you’re not an international financier, changes in the currency markets can have a substantial impact on your bottom line. If your business is involved in any way in importing or exporting goods, a shift in currency values could set you up for a loss based on the value of the currencies being used in the transactions. If you have investments, any portion of them that’s held in other countries or in other currency denominations can be affected by changes in the markets. Because of the nature of international trade in today’s marketplace, it’s hard to find anyone that doesn’t have at least a small exposure to risk due to foreign exchange rates.

Hedging Using Forex Signals

It’s possible to hedge against these risks by using forex analysis to identify potential losses and mitigate them as they arise. Your forex signals provider can supply you with any number of information streams that will contain the data you need to keep ahead of risk in the currency markets. In addition to finding and planning for hedge investments to protect your existing investments against unexpected swings in the currency markets, you can set up automatic hedges with your forex broker that will be generated when certain technical thresholds are breached.

Spot Contract Auto-Hedging Has No Downside Risk

Most investors have a forex signals provider that does more than simply offer trade tips. Most forex brokers offer services to their subscribers to execute auto-hedging trades, usually in the form of spot contracts. Spot contracts refer to contracts that involve buying or selling foreign currencies with immediate delivery specified. This sets spot contract auto hedging apart from normal forex trades that use forex signals to trigger more open ended trades that ride until buy or sell triggers are met.

The entire purpose of spot auto hedging is to reduce risk immediately upon discovering it. Trades that are made with an eye towards profits increase risk, because of the chance that the forex market will move in the opposite direction. Spot contracts would never increase risk because they wouldn’t be executed unless the underlying fundamentals improved the trader’s position immediately.

Profit Forex Signals


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