Currency/Forex Hedging using Momemtum Strategy
Currency/Forex Hedging using Momemtum Strategy
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user9343456 · External communityPost link
External question — Quantitative Finance Stack Exchange
Author: user9343456
Original post: https://quant.stackexchange.com/questions/32145
License: CC BY-SA 3.0 — https://creativecommons.org/licenses/by-sa/3.0/
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Mainly the two ways I could find on currency hedging are using forwards (to lock in a future exchange rate) and options. However, I'm curious whether currency can be hedged via some commonly known trading strategies.
For example, I know that a trading strategy based on momentum can be used for FX, but how exactly can the momentum strategy be used for currency
hedging
?
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rupweb · External communityPost link
External answer — Quantitative Finance Stack Exchange
Author: rupweb
Original post: https://quant.stackexchange.com/a/32162
License: CC BY-SA 3.0 — https://creativecommons.org/licenses/by-sa/3.0/
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The point of currency hedging is that the bid / offer spread paid by the client includes hedging costs. Having said that, in the interbank market spreads are so tight due to increased competition that it's difficult to cover hedging costs. So you have to take more risk.
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Quoted from Forex.com.bd-Editorial External question — Quantitative Finance Stack Exchange Author: user9343456 Source score (net votes, not local likes): 1 Original post: https://quant.stackexchange.com/questions/32145 License: CC BY-SA 3.0 — https://creativecommons.org/licenses/by-sa/3.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Mainly the two ways I could find on currency hedging are using forwards (to lock in a future exchange rate) and options. However, I'm curious whether currency can be hedged via some commonly known trading strategies. For example, I know that a trading strategy based on momentum can be used for FX, but how exactly can the momentum strategy be used for currency hedging ?
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