Who Trades the Forex Market?

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  1. Alexander Roan says

    Hi Alwin, you mentioned hedging, can you explain what that is?

    • Alex,
      Good question. Hedging is a process to reduce the risk that you may have in an investment or in business.

      In my old firm (Rolls Royce Plc), they use to hedge their currency position to manage their USD exposure. That’s because, the company’s operations are predominantly paid in GBP but most of their sales were in US Dollar. This means they have a currency risk exposure in the event that the USD moves adversely.

      Rolls Royce would hedge their position using a currency instrument (E.g. forward or future contracts).

      Hope that makes sense.


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