Risk management · Intermediate

Hedging Basics in Forex

A 1-minute lesson from the MarketPro academy, one of 22 in risk management.

Last reviewed 15 September 2026 by the MarketPro research desk · Editorial policy

Short answer

Hedging means taking a position intended to offset the risk of an existing position, rather than to generate an independent profit on its own. Hedging is not free.

Hedging means taking a position intended to offset the risk of an existing position, rather than to generate an independent profit on its own.

Common Hedging Approaches

Direct hedge: opening an opposite position on the same pair, which effectively neutralizes further gains or losses on that exposure while both positions remain open
Correlated hedge: using a different, correlated pair to offset risk in the original position, rather than the identical instrument

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Costs and Limitations

Hedging is not free. Each additional position can carry its own spread, commission, and potential swap charges, and holding offsetting positions simultaneously ties up margin on both sides. A hedge that fully offsets risk also caps potential gains for as long as it remains in place, since profit on one side is matched by loss on the other.

Risk note: hedging reduces certain risks but adds complexity and cost, and it does not eliminate risk entirely — correlations can weaken, and unwinding a hedge at the wrong time can still result in a loss. It is a risk-shaping tool, not a guaranteed protection.

Lesson 18 of 22 in Risk management

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Written and reviewed by the MarketPro research desk

MarketPro is a trading-signal and trading-education app operated by Harajuku Holdings LTD (Cyprus). Our signal desk publishes and tracks every trade idea in-app, and every page here is checked against the app's live behaviour before publishing. Last reviewed 15 September 2026. How we produce signals and content · About MarketPro

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