FX Risk Management

In FX, risk management is a strategy in which you can set rules to minimise the impacts of negative currency movements and protect your bottom line/returns from the changes of FX market movements

Trading currencies means dealing with prices that are constantly moving up and down, often almost instantaneously in response to news from the financial markets, with the exchange rate of a given currency pair changing every half-second. This volatility and the unpredictable nature of the currency market has the potential to erode profit margins or investment returns if FX risk isn’t managed effectively.

FX risk is an inevitable by-product of doing business internationally, but by implementing FX hedging market participants can mitigate the risks involved using a variety of different currency products.

It is important to note that hedging practices are typically not designed to generate profits but, rather, to protect the bottom line or returns from investments.