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 1 12
2. The Blacklisted Trading Method A Beginner’s Guide to Forex Hedging By Hugh Kimura Take the Forex Hedging Challenge Page of 2 12
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. Take the Forex Hedging Challenge Page of 3 12
4. Take the Forex Hedging Challenge Page of 4 12
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. Take the Forex Hedging Challenge Page of 5 12
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 6 12
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. Take the Forex Hedging Challenge Page of 8 12
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. Take the Forex Hedging Challenge Page of 10 12
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. Take the Forex Hedging Challenge Page of 11 12
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. Take the Forex Hedging Challenge Page of 12 12