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How Forex Hedging Works
Forex hedging works by opening a second position that profits from the same move that hurts the first. The two positions partly cancel, leaving the account with lower net exposure.
Anatomy of a simple hedge
A trader holds a long position in EUR/USD. The trader opens a short position of a related size. If EUR/USD falls, the short gains while the long loses — net exposure shrinks. The trade-off is that the hedge also limits upside.
Hedging in the platform
Within the managed structure, hedging is one tool among position management techniques. Costs like spreads and slippage make hedging imperfect — it reduces, never eliminates, risk.
Quick answers
Is a perfect hedge possible?
Not in practice — spreads, fees and varying volatility make it imperfect.
Why hedge if it limits gains?
To protect capital during uncertainty; the goal is balanced portfolio-level growth.