Hedging against USD

[rayzzzz82]

I have around 60k usd. How do i hedge it against the currency drop against sgd? Given that i am using a forex account, hoe many lots of usd/sgd should i sell so as to hedge against the risk of holding usd?

 

[SBC]

Can average some it drops some more.

I am holding for USD too, about $60k too

 

[rayzzzz82]

I am not considering averaging. I want to hedge by selling USD/SGD. What is the lot size which I must sell to hedge against every drop in USD against SGD considered that I hold 60K in USD?

will any expert please advise?

 

[Mecisteus]

Your exposure is 60k USD. It means you are long USD.

You hedge by shorting 60k USD then.

Hedging comes at a cost. No free lunch.

When I trade in Interactive Brokers, I don't convert my SGD to USD to buy USD stocks. I prefer to borrow in USD. In a way, this is already a natural hedge. My exposure can be more than 100 to 200k USD at times.

 

[rayzzzz82]

So how many lots of USD/SGD I must short to hedge against any drop in USD for the forseeable future?

6 lots or 0.6 lots?

 

[focus1974]

What I do is have an asset allocation among the inversely correlated currencies

 

[orange_sky]

So how many lots of USD/SGD I must short to hedge against any drop in USD for the forseeable future?

6 lots or 0.6 lots?

Eh just sell 60k usd. So simple

Sent from lala using GAGT

 

[rayzzzz82]

Unfortunately my trading fund are in USD so if I sell them away, I am not able to trade.

Since my expediture is in SGD, I am hedging USD against SGD.

So am I right to say that if I currently holding 60K of USD, I can hedge it by shorting 0.6 standard lots of USD/SGD?

 

[Yachtmaster]

no need to hedge a rising currency

 

[orange_sky]

Unfortunately my trading fund are in USD so if I sell them away, I am not able to trade.

Since my expediture is in SGD, I am hedging USD against SGD.

So am I right to say that if I currently holding 60K of USD, I can hedge it by shorting 0.6 standard lots of USD/SGD?

There is no "lot" for fx. Just the notional amount

Sent from lala using GAGT

 

[rayzzzz82]

USD is not really looking good in the long run, beside I am not betting on USD at the moment.

I just need a reply to "So am I right to say that if I currently holding 60K of USD, I can hedge it by shorting 0.6 standard lots of USD/SGD?"

Appreciate if anyone can advise me. I will rest my case if my question is answered. Thank you.

 

[rayzzzz82]

what do you mean by notional amount?

I am running MT4 account so trading size is in terms of lots size. for a standard lot, every pip change will amount to around $10 usd for eur/usd.

 

[Shiny Things]

I have around 60k usd. How do i hedge it against the currency drop against sgd? Given that i am using a forex account, hoe many lots of usd/sgd should i sell so as to hedge against the risk of holding usd?

People are right that "lot size" isn't a thing in FX-land. People don't think in lots, they think in notional amounts. You should too. $60,000 USDSGD is the amount you need to sell. Figure out what your lot size is; divide 60,000 by the lot size; and that's the number of lots you need to sell.

Anyway, because I'm a nice guy, here's the rule: for 1 million CCY1, a 0.0001 change in the spot rate = 100 CCY2 of PnL. So if your broker's telling you that one pip on one lot of EURUSD (or whatever) is $10, then your lot size is $100,000, and you need to sell 0.6 lots of USDSGD to hedge that USD you've got floating around.