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Hedging currency risk in short stock positions (any different from long positions?)
seems as if nobody has the same problem here... maybe a moderator can move the topic to the stock sections since the problem is not only currency related..?
unless you're entering and exiting both positions at the same time it's best to hedge for 10,000 for each position giving you a grand total of 20,000 for two trades regardless if they cancel each other out to make things easier if you exit one position at a different time from the other.
I hope that helps.
Itchymoku
R.I.P. Joseph Bach (Itchymoku), 1987-2018.
Please visit this thread for more information.
lets say you had a net 0 after you have two positions on and then you took one position off. One of your remaining positions would be unprotected so you'd need to match it with 10,000. This is the reason why you should always hedge regardless if the hedges counter balance one another out.
R.I.P. Joseph Bach (Itchymoku), 1987-2018.
Please visit this thread for more information.
maybe i took a step forward with this problem... and maybe the long short positions arent even the problem...
i have a margin account which is say USD 50.000 and which is also the net liquidation value..
dont i always have to hedge the net liquidation value no matter how strongly i am invested and no matter if i am long or short or anything?!
e.g. i have one long position on 50 % margin and I invest fully, so i would carry a USD 100.000 position... but i cannot hedge the 50 K i dont even "own"? so i would just hedge the net liquidation value of 50.000 USD
Or i have a short position with usd 20.000 on 50 % margin.. which would mean i am 40.000 in cash and 10.000 usd is margin for the 20.000 short positon... i would still hedge the 40k cash + 10 k margin, hence 50k usd which is the net liquidation value?!..
... and as the time goes on i would adjust my hedging position in eur.usd e.g. weekly to hedge the new net liquidation value which resulted from either losses or profits?!..
did i overlook something or are my thoughts right?