3 types of hedging
hedge means protection of capital.
So, when there is confusion,
we place trade in both directions till clarity with definite stop losses.
Generally traders know about hedging but not enough.
It is must to know
how & when to open hedging and how to close?
3 main type of hedging are-
- Intra commodity hedging- hedging within same commodity
buy silver january and sell silver december with 300 pt sl.
this is safe.
2.intra sector- hedging within same sector but different commodities.
say buy goldm 28800 sl 28650
sell silvermini 56000 sl 56380
buy copper 406 sl 404 sell nickel 940sl 948 RISK-2000 IN BOTH
LEADMINI & ZINCMINI WITH 1/- SL
During day time book small tgt in both sides.
big tgt are possible frm 6to10pm in evening.
3.INTER SECTOR- hedgng in different sector .it is more risky
when it is clear that mkt is red.
sell gold and sell nickel
when mkt is clear green
buy gold and buy nickel
or buy silver & buy copper
when in confusion,
buy strong bullion
sell weak base metal (accoding to buyer/seller ratio)
IT becomes dangerous bcoz sometimes sl in both sides hit.
When comdex is less than +30 or -30pt
bullion goes up & base metal take breather.then vice versa.
When comdex is more than +50 or -50pt
all commodity goes bullish or bearish in the same time.CALLED ALLROUND BULLISHNESS/BEARISHNESS.
IN SUCH MKT,
buy in each dip & sell on each jump.@5.55/6.55/7.55/8.55/9.55pm.
or sell on each jump in all commodity but with small strict sl,book small profit very fast.