Areas Of Expertise


Forex

Hedging

Dow Futures

Bullion

Nifty

Equity

Future & Options

FAQ


Q. What is a Hedge?

A. Hedge is a protection during uncertain times, against adverse price movements in Forex, Stocks, commodities etc. Once you execute Hedge Action, you are actually locking an exchange rate or the value of your portfolio, for a specific period, irrespective of the direction of the markets. So you are certain to get the cash flow at the locked rates.

Q. Why should I hedge?

A. There is no need to hedge if Forex rates ( or rates of any other commodities ) are fixed. But fixed Forex rates are history. With increase in global trade and integration of the domestic economy with the global economy, Forex rates will remain volatile and can wipe out present and previous profits, if they are left unhedged. So, exposure to Forex must be hedged.

Q. How do I Hedge?

A. You can Hedge through the Futures and Options markets in India. They are well Regulated, Cost effective, Paperless transactions, Very liquid, Highly transparent, Very much legal and Tax friendly. The best part is that the Default risk is Zero in case you trade through the exchanges.

Q. Can I Hedge through a Bank?

A. Only Forex exposure can be hedged through a bank, through Forward booking in the OTC market. One has to follow the paper work and the prescribed compliance procedures every time a Forward contract is booked. By definition, Forward contracts are prone to Default by the counter parties.

Q. Is the Currency Futures market only for speculators?

A. Any Futures market in the world has a primary economic objective of allowing people to manage their risks of the corresponding markets. There are three set of players in a Futures market - 1) Hedgers ( who pass their risks to others ), 2) Speculators ( who take risks and provide liquidity) and Arbitragers ( who help in price discovery). So all are important to a healthy Futures market.

Q. How can I Hedge through an Exchange?

A. You just have to open an account with a stock broker, who also is a broker of the Currency segment. NSE allows trading in Forex.