When the Hedge is Against You

When you hedge currency pairs you will always be in an upswing or a downswing at any given time. Sometimes the upswings or downswings are shortlived. Sometimes they go on for a long time. The present downswing is the longest I have seen in two years of hedging the market using the FreedomRocks system.

Some people ask me if this is normal. All I can say is there is nothing really 'normal' about the FX markets. They go up and down in predictable and unpredictable ways. If we always knew the direction markets would take we might as well directional trade as we would always know the direction of the market.

In hedging it is the hedge being against us or for us that gives us those great equity swings. If we want to get the windfalls, we have to suffer the drawdowns. It is just the nature of the beast.

Now that we are in a drawdown period I would keep a close watch on things. At some point it will turn around. That is the time to be in with live money as you will gain considerably on the upswing which will help to insulate you well for the next downswing and all the while you will be buying low and selling high and earning daily interest.