What is the simplest/ most effective hedging strategy in forex trading? -

There are Forex options, but you are delving into a complex and dangerous world of unknowns too difficult to explain here. A hedging strategy is essentially a method to reduce risk. Have you considered other strategies to reduce risk, that don t cost you anything or open new positions or cause greater overhead and more maintenance? One such strategy involves not leveraging a futures position to begin with. I trade Forex and other futures for living, and rarely do I see people that understand fully the significance of leverage. You can buy $100,000 worth of currency with $1,000 margin in a standard account. This would be the purchase of one standard lot, at 100:1 leverage. Or you can get 200:1 leverage in a mini account. Wo, how much trouble can we get into now? Just because you quot;canquot; doesn t mean you quot;shouldquot; trade with this kind of leverage. Trading stocks with 2:1 leverage is considered risky. What most people don t seem to realize, is that you don t have to trade with leverage at all. Just put $100,00 in your account, buy one lot, and you have zero leverage. Or put $10,000 into a mini account and buy one mini-lot, or $1000 and buy one micro-lot. You can see that by controlling leverage, trading the Forex doesn t have to be any more risky than trading stocks or any other investment. The same holds true with all or any futures contract. You decide how much leverage to use, and how much risk to accept. You can accept the maximum leverage like most people looking to quot;get rich quick,quot; and blow out like 80%-90% of all traders, or you can play it smart and ease into it slowly, starting with a simulator while you re learning, probably for at least six months. There is no need to hedge a currency position any more than there is any need to hedge a stock position, if you control the leverage. check this out http://cgi.ebay.com/ws/eBayISAPI.dll?Vie... Hedging is essentially offsetting risk - so a hedging strategy would be a trade made to offset the risk in another trade. I don t trade forex - are there forex options that can be traded besides the currency pairs? For instance a simple strategy for stock hedging is to buy a stock and also buy a put - the put is intended to cover the downside risk of the stock - you have hedged your risk. Here is a good forex information website that I saw when I was trying to compare currency futures trading to forex trading. The example I gave could be done in futures trading - combining options and futures trades. http://www.currency-forextrading.com/