GBP/CHF - The Best Pair to Apply a Hedging Strategy This Week

Hedging Strategy of the Week<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

§         Entry Zone: Go both long and short at the market if the price is at any level within the 2.4130-2.4200 range

§         Protective Stop: Long stop below 2.4070 and short stop above 2.4275

§         Profit Target: Long Target at 2.4200 and Short Target at 2.4130

§         Profit Potential: 70 pips (excluding transaction costs and slippage)

The GBP/CHF is our primary target for hedging in the week ahead, with clear range-bound trade and concrete support and resistance levels. To hedge, go both long and short at the market if price stays within the above Hedging Zone. Take profits at R1 for longs and at S1 for shorts, covering losses above R2 or below S2. 

For Currency Pairs that are trading sideways, HEDGING is the best strategy to implement.  This involves putting a buy and sell order in the same currency pair at the same time in one account.  Every day, we rank the major currency pairs by suitability for hedging. 

Rules for Following the Hedging Radar

1)       Entry Zone -> Go both long and short at the market if the currency is at any level within the Hedging Zone. 

2)       Profit Taking ->Target for the long order is the top of the entry zone, for the short order is the bottom of the entry zone.

3)       Stop Levels are Key Support and Resistance Points -> Place the actual stops a few pips above the higher level and a few pips below the lower level. The break of these levels signals that the ranges have been broken and the hedging strategy should no longer be implemented.

4)       The lower theAverageTrueRange, the Less Risky the Currency is for Hedging.