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What is hedging and how is it done?

April 26, 2017hedging

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What is hedging and how is it done?

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Hedging an open position involves opening a second position of the same currency pair and amount in the opposite direction. For example, if you buy GBP/USD, you can hedge it by selling GBP/USD. This can be viewed as a wash, however since they are individual positions, you can take profit or losses on each. For additional information, please visit our Education page.