How to make money by hedging one long and one short in currency circle contracts

The currency circle contract hedging profit mechanism of one long and one short includes: positioning the market direction and opening contracts in the opposite direction (long and short). Set stop loss and take profit to manage risk. When the market moves in the expected direction, long contracts make money and short contracts lose money; and vice versa. Advantages: Reduce risk, increase potential profits. Note: High margin requirements, transaction fees, and market risk still exist.

Profit mechanism of currency circle contract hedging of one long and one short

How to profit from one long and one short hedging?

• Expected price increase: open a long contract and open a short contract to lock in losses.
• In anticipation of a price drop: open a short contract and open a long contract to lock in losses.

Detailed process:

1. Determine market direction: Analyze trends and predict the direction of price changes.
2. Open opposite contracts: Open long contracts (buy) and short contracts (sell) at the same time.
3. Set stop loss and take profit: Manage risk and limit losses.

4. Profit and loss results:

   • The market moves in the expected direction:

     • Long contracts make profits, short contracts lose money.
     • Net profit = long contract profit - short contract loss.

   • The market moves in the opposite direction:

     • Loss on long contracts, profit on short contracts.
     • Net profit = short contract profit - long contract loss.

Advantages:

• Risk reduction: Hedging strategy reduces the risk of single contract trading.
• Potential profit increase: When the market fluctuates violently, higher profits can be obtained.

Notes:

• Margin requirements: Hedging transactions require higher margins.
• Transaction Fees: There are transaction fees for opening and closing contracts.
• Market Risk: Hedging strategies cannot completely eliminate market risk.

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