Forex Hedging Guide (Beginner Level)

Hedging is probably the most controversial trading method on the internet.

Most trading educators only have bad things to say about it, and there are tons of negative comments on YouTube.

But why?

That’s because hedging is one of the most misunderstood trading methods of all-time.

Transcript

1. Take the Forex Hedging Challenge Page of
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2. The Blacklisted Trading Method
   
   A Beginner’s Guide to Forex Hedging
   
   By Hugh Kimura
   
   Take the Forex Hedging Challenge Page of
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3. Copyright © 2023 TrueLiving Media LLC
   
   All rights reserved
   
   Disclaimer
   
   Trading involves substantial risk and there is always the potential for loss. All content in this guide is for
   educational and informational purposes only and is not trading or investment advice. You should be
   aware of the risks associated with trading and seek advice from a certi
   fi
   ed
   fi
   nancial adviser if you have
   any doubts. Hypothetical or Simulated performance results have certain limitations. Unlike an actual
   performance record, simulated results do not represent actual trading. Also, because the trades have not
   actually been executed, the results may have under-or-over compensated for the impact, if any, of certain
   market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the
   fact that they are designed with the bene
   fi
   t of hindsight. No representation is being made that any
   account will or is likely to achieve pro
   fi
   t or losses similar to those shown. Testimonials appearing may not
   be representative of other clients or customers and is not a guarantee of future performance or success.
   You are more powerful than you can imagine, keep expanding.
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4. 
   
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5. Introduction
   Hedging is probably the most controversial trading method on the
   internet.
   
   Most trading educators only have bad things to say about it, and
   there are tons of negative comments on YouTube.
   
   But why?
   
   That’s because hedging is one of the most misunderstood
   trading methods of all-time.
   On the surface, hedging doesn’t seem logical to most people…
   
   The most common argument against hedging is:
   
   “If you buy and sell the same lot sizes at the same time, then
   you won’t make any money.”
   
   Many people make that assumption and stop there. They do not
   investigate any further.
   
   That’s
   fi
   ne, there are plenty of other trading strategies out there. They
   only need one good strategy to be a consistently pro
   fi
   table trader.
   
   However, if you’re tired of getting stopped out all the time and dealing
   with painful losing streaks, then Forex hedging just might be the
   trading method that you’ve been looking for.
   
   This guide will teach you the basics of hedging and give you a
   strategy that you can start practicing right now.
   
   More importantly, I’m going to show you how to think di
   ff
   erently from
   the vast majority of traders out there.
   
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6. This is huge, and more important than any trading strategy.
   In trading, if you’re on the side of the majority, you’re usually going to
   lose money.
   
   Therefore, this guide will not only give you an introduction to hedging,
   but it will also be an introduction to contrarian thinking.
   
   This mindset is one of the most important skills you can have in
   trading…and in life.
   
   But
   fi
   rst, I’ll show you what most people on the internet are missing,
   when it comes to hedging in Forex, and why I feel Forex is the best
   market to hedge in.
   
   After you understand this information, you should start to see the
   value in hedging…and you’ll be more educated about hedging than
   most people.
   
   Keep in mind, these are my opinions, based on my experience.
   Individual mileage will vary. Use this information to form your own
   opinion of hedging.
   
   Hedging is not a holy grail or a magic trading system. However, if you
   resonate with this method, I invite you to learn more.
   
   For me, it has been the most consistently pro
   fi
   table trading method
   I’ve ever used.
   
   Alright, if you’re ready to dive into the most blacklisted trading
   strategy on the internet, keep reading…
   
   Take the Forex Hedging Challenge Page of
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7. What is Forex Hedging?
   If you’re new to trading, hedging is simply a trading method where
   traders can have both buy and sell trades open at the same time.
   
   For example, a Forex trader might have both long and short trades in
   the EURUSD open in her account at the same time.
   
   At
   fi
   rst glance, this might not make sense because the wins and
   losses would cancel each other out.
   
   But here’s why hedging works…

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8. How Hedging Makes Money
   The #1 point that most people miss when they badmouth hedging
   is that you don’t actually have to be 100% hedged all the time.
   There are times when I’m fully hedged, partially hedged and not
   hedged at all.
   In fact, I only hedge when I’m wrong about a directional trade. If I’m
   right about the direction of a trade, I don’t have to hedge and I simply
   take my pro
   fi
   ts.
   
   It really is as simple as that.
   
   But most people think that you have to be hedged all the time and
   that’s simply not true. If you’re 100% hedged all the time, then of
   course you won’t make any money.
   
   Duh.
   
   Since about 90% of aspiring traders fail, then you don’t want to think
   like most people…right?!
   
   Again, I want to get you to think di
   ff
   erently from the general
   population that’s following whatever Jim Cramer is yelling about on
   TV.
   I’ll get into speci
   fi
   c hedging trades later in this guide.
   
   But
   fi
   rst, I’ll address a couple of the other misconceptions about
   hedging that stop most traders from exploring this exciting trading
   method.
   
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9. Isn’t Hedging Illegal in the US?
   No.
   
   There are restrictions, but you can still hedge as a US resident, if you
   know what you’re doing.
   
   It’s all perfectly legal and I’ve been doing it in a real money
   account since 2011.
   However, there are speci
   fi
   c rules that you have to follow in order to
   hedge. But they are probably more
   fl
   exible than you thought.
   
   First, you need to know what the rules are. Here are the 2 US hedging
   restrictions that you need to know about:
   
   1. First In, First Out (FIFO): You have to close older open trades in
   a currency pair before you close newer open trades in that
   currency pair. 

   2. Longs and Shorts: You cannot hold longs and shorts in the same
   currency pair, at the same time, in the same account.
   
   Most new traders look at those rules and stop there.
   
   But I wasn’t willing to settle for the standard answer, so I researched
   it further.
   
   What I discovered is that there are exceptions…
   
   1. First In, First Out (FIFO): You have to close older open trades
   before you close newer open trades, only if the lot sizes are the
   same. If the lot sizes are di
   ff
   erent, you can close them in any
   order you want! 

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10. 2. Longs and Shorts: You can hold longs and shorts at the same
    time, if you have more than one account. It’s easy to set this up
    with a sub account.
    
    There are actually 3 solutions that you can use to get around the US
    hedging rules. What I’ve outlined above is just one work-around.
    
    Now that you know it’s possible, here’s how to actually do it…
    
    To take advantage of this solution you can trade with a nano lot
    broker.
    What’s a nano lot?
    
    A nano lot is the smallest possible trade size in Forex.
    
    It’s basically 1 currency unit. So if you’re trading US Dollars, it’s $1
    USD. You can think of this like trading stocks, where you trade 1
    share of stock.
    
    Since the lot size is so small, you can easily create di
    ff
    erent trade
    sizes for all of your trades, and therefore do not have to follow the
    FIFO rules.
    
    To solve the issue of not having longs and shorts in the same
    account, you can open sub accounts, which are separate
    accounts that are listed under your primary account.
    You usually do not have to go through the entire account opening
    process again to create a sub account.
    
    The best way to see these concepts in action is open a DEMO
    account at a Forex broker and try this out. It only takes a few
    minutes.
    
    Never try hedging for the
    fi
    rst time in a real money account.
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11. A demo account is just play money, so take as many trades as
    you want. You are not liable for any losses.
    Yes, it does require a little more setup and practice to hedge in the
    US.
    
    But once you get the hang of it, the process is actually very easy.
    
    See the entire process in action in this video.
    
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12. Why Not Just Use a Stop Loss?
    This is one of the most common questions that I get about hedging,
    so I’m going to answer it right now.
    
    In theory, a stop loss and a hedge seem like they are the same thing.
    
    But they aren’t.
    
    Here’s why…
    
    This is just a sample. To get all 29 pages of
    this PDF guide for FREE, click here.
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