Strategy - Definition and Features

Hedging - Good, Bad, the Dirty

Communication is all about clarity. We communicate some piece of information, the recipient gets it. Straightforward on the face of it. Speaking about trading will typically be succinct, focused, and very clear when complete.
The ‘audience’ has as many expectations as the speaker though: one should know the context and purpose of the information they are getting to a specific discourse.
I occasionally drop into jargon or analogy. It’s a personal weakness: I assume the audience will have the appropriate context of the situation, and knowledge of the context. It’s also a habit. I was on a recorded line for a decade, and use as few a words as possible in a business situation.
My writing, not so much.
I’ve hesitated to talk much about trading, because of ‘it’. I’ve seen ‘it’ far too often…..’it’ being people using language and jargon of trading without really knowing what they are talking about.
A great example of this is around options. People can pick up the definitions, the verbiage, the ‘lingua franca’ as it were.
Problem is, they have no clue what they are talking about in the whole.
Sure, definitions are known and expounded upon. But the context/situation remains in the abstract to them. Or what they are talking about doesn’t sync with the nature and purpose of the exposure they are taking on. Like talking about that cool new skateboard you’re riding as you're sitting on a bicycle.
This isn’t conceit or hubris - it’s only what I’ve observed. Hence the backstory above.
Speaking with u/modo85 and u/TheJosh last week plugged me in again to professionals face to face, and a recent post about Constellation by a sub got me thinking about trade again. So….I’m going to tackle the most misunderstood word in trade: hedging.
I was taught in business school that a hedge is a ‘risk neutral activity’.
One can find definitions for hedging in many places, and for the most part, they’ll align. What won’t is the people using the term.
Dynegy, Enron, and other companies took on ‘hedging programs’ that were often positions of leverage. Even the word ‘hedge fund’ is a relative misnomer. Looking at some of the bomb craters left behind by a couple of them....they were either simply a ponzi or flavours of insider trading. They weren’t hedging, they were stealing.
So, what’s a hedge?
A risk neutral activity that reduces aggregate risk to a primary exposure.
A Canadian company buying a greenhouse from an American supplier in 4 easy payments over the next 2 years? Great. You’ll have to pay in USD, so, buy forwards in 6 month increments, pay CAD at the time they come due, your forex exposure is gone, and the total cost is known in advance.
The USD/CAD rate might move for or against you during that time.
But that’s the point of a hedge: replace risk with certainty.
A while ago, Westjet bought a strip of jet fuel futures, taking out physical price exposure for (a very long) 2 years. While not unheard of, it’s a pretty big move. If jet fuel prices tank, they get to eat the difference. As it happened, jet fuel prices soared, Westjet bought physical with cash and offset the futures gains against it. They enjoyed a 2 year window of serious operational cost advantage, and their share price accretion showed it.
Prescient....or lucky? That’s what business books are written about.
This example might have prompted you to think about another industry where energy is the single largest direct input cost behind headcount (hint: it's cannabis)
Constellation’s entry through the CGC buy is another example of a hedge to myself. Different nature and purpose, but a hedge nonetheless.
In my eyes, STZ sells booze. Weed will impact aggregate sales of booze, with potential to reduce it.
STZ’s buy into the industry is a hedge is to replace dislodged revenue from booze by dope: cannabis exposure will replace these lost revenues, keeping STZ whole.
A hedging program is part of a larger initiative, and plugged directly into the strategic course of the business. It has topline impact.
If you’ve noticed - the Westjet and STZ examples above are for far different underlying purposes - but they are both simply hedges.
Hedging for the retail investor might entail seeking exposure to different provinces, or different links of the value chain, or perhaps within wholesale or retail price exposures.
With hedging, you are seeking to reduce, not enhance, existing exposure.
The other takeaway is (and there is one in here): don’t use terminology and trade terms unless you know exactly what you are talking about, or what the underlying purpose of using it is. It doesn’t matter what someone notices or thinks: any professional can tell pretty quickly if someone knows what they are talking about.
What really matters is that you know what you are actually doing when you take on risk of loss to your capital.
submitted by mollytime to TheCannalysts [link] [comments]

12 Minute Forex Trading Strategy: How To Scalp The Mexican Peso and Why It Works Investopedia - YouTube The Best Strategy To Use For Forex Arbitrage Definition ... Top 4 Things Successful Traders Do by Investopedia Forex Baseline - We Go Deep - YouTube foreign exchange risk DRAWDOWN IN FOREX TRADING (Risk / Money Management / Behavioural Economics) WHY UNDERSTANDING WICKS IN TRADING IS THE MOST IMPORTANT ... The Best Exit Strategies for Your Investments - YouTube

Investopedia academy s forex trading for beginners course. Lifetime access to every one of the videos in this course. Having lost a bunch of money day trading on my own self taught knowledge i needed a course that would provide me with a strategic and consistent way to trade. Foreign exchange is the process of changing one currency into another currency for a variety of reasons usually for ... Forex Options Trading Definition Forex options trading allows currency traders to realize gains or hedge positions of trading without having to purchase the underlying currency pair. more Strategy - Definition and Features The word “strategy” is derived from the Greek word “stratçgos”; stratus (meaning army) and “ago” (meaning leading/moving). Strategy is an action that managers take to attain one or more of the organization’s goals. Low risk Forex trading; Gasan investment / Review alpari; Forex euro chf / Best time to trade Forex tips and tricks ; Dowland indicator binary option platform MT4; China investing in europe; 4b2b investment hatowice weather; Gbp nzd daily analysis Forex; Binary options strategy 60sec / Binary options strategy scams using paypal; Cara membuat robot ea Forex; Binary option enfinium; Ascent ... Analyze Forex pairs, indexes and commodities to capitalize on trading opportunities. Build strategies to take advantage of long and short-term Forex trades. Take advantage of the Forex’s low commissions and fees and how to open and close trades in minutes. Evaluate the quality of a Forex dealer and use advanced order types to control risk. What is risk transformation? Risk transformation processes expand upon the traditional view of risk management within a financial institution. Taking a more holistic view, risk transformation implements risk management capabilities together with regulatory and business objectives. It views risk management as a strategic asset to be embedded ... A common definition of exchange rate risk relates to the effect of unexpected exchange rate changes on the value of the firm (Madura, 1989). In particular, it is defined as the possible direct loss (as a result of an unhedged exposure) or indirect loss in the firm’s cash flows, assets and liabilities, net profit and, in turn, its stock market value from an exchange rate move. To manage the ... Forex trading strategies can be based on technical analysis, or fundamental, news-based events.The trader’s currency trading strategy is usually made up of trading signals that trigger buy or ... Investment analysis, defined as the process of evaluating an investment for profitability and risk, ultimately has the purpose of measuring how the given investment is a good fit for a portfolio. This article also looks at evaluating risk in investment and an investment analysis example. Credit risk, or default risk, is the risk that a financial loss will be incurred if a counterparty to a (derivatives) transaction does not fulfil its financial obligations in a timely manner. It is therefore a function of the following: the value of the position exposed to default (the credit or credit risk exposure); the proportion of this value that would be recovered in the event of a ...

[index] [6424] [11714] [9202] [2402] [22914] [9040] [6530] [14801] [26385] [10992]

12 Minute Forex Trading Strategy: How To Scalp The Mexican Peso and Why It Works

CLICK HERE FOR MORE INFO: https://rebrand.ly/forex33 And start earning in the Forex Market Now! In our growing multinational business setting, there are firm... Live Forex Strategy Sessions Monday - Friday 7:30am ET (London Lunch) RISK WARNING Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The ... Forex Equity and Risk Management Pt 1 MUST WATCH for Forex Traders - Duration: 10 ... Investopedia 105,651 views. 1:29 . Interest Rate Swap Explained - Duration: 3:38. Xpono VF 293,819 views. 3:38 ... Investopedia TOUR, REVIEW: HOW TO MANAGE RISK by ... Forex Market - Forex - Investopedia Definition Investopedia by shahid hussain. 0:16. Investopedia Reviews: Koenigsegg One:1 by Investopedia ... In this video, Ken wraps up the third video in the "Exit Strategies" videos discussion. He talks taxes and business plans and why it so important to be think... Subscribe: http://bit.ly/SubscribeTDAmeritrade Every day, trillions of dollars are traded on the forex market, which influences other asset classes. To get a... WHY UNDERSTANDING WICKS IN TRADING IS THE MOST IMPORTANT **FOREX-STOCKS-CRYPTOCURRENCY** What Broker Do I recommend? https://bit.ly/2QCWYTD Disclaimer Our co... It's the final piece of the algorithm, and there's a lot to it. But the payoff when it's all said and done can be incredible. Beginners Video - https://youtu... Learn to trade Forex with simple techniques and strategies. Girls Gone Forex 20 pips 20% For more information visit us at www.facebook.com/girlsgoneforex Drawdown separates the sustainable traders from the long-term losers. It's as important as your trade-by-trade money management. However, it seems very few t...

http://arab-binary-option.leteszestgolf.ml