A guide to forex trading strategies for risk management

For many businesses operating globally, fluctuating exchange rates can heavily impact their bottom line. But with the appropriate foreign exchange (forex) strategy, these fluctuations can also be used to their advantage.

A forex trading strategy provides insight into when is best for a client to buy or sell a base currency. However, some strategies may work better in certain situations, and all can benefit from the expert risk management of a Halo currency specialist.

In this blog, we will cover some of the currency trading strategies for minimising risk, depending on your business requirements and trading style.

Why you need forex trading strategies for risk management

The currency market is especially influenced by wider market uncertainty and volatility. In currency trading, unpredictability and variations around inflation rates can significantly impact exchange rates and create losses at any given time. By managing risk through a foreign exchange (forex) trading strategy, your business has the opportunity to use currency volatility to its advantage.

At Halo Financial, we help you to understand the impacts of translation and economic risks on your market value as a direct result of currency fluctuations. Our currency specialists are also here to help secure your base currency using a personalised forex trading strategy.

Explore forex trading strategies

These general strategies provide structure to manage risk for forex trading, but can be tailored to accommodate your unique business requirements.

Spot trades

This forex trading strategy is best suited to clients looking to trade for shorter time periods without the fast pace of some higher-risk strategies.

Spot trades typically involve a client making one trade per day, with any risk of losses determined by intraday changes in the base currency. Economic developments may significantly influence currency markets.

Market orders and stop loss

With market orders, positions can be booked in the market for several days and clients also have the opportunity to manage their currency risk by entering into a stop loss. This means a client can lock in an exchange rate for a predetermined amount of currency, whilst protecting potential downside in currency movements.

Forward contracts

A forward contract is a way of insuring against currency exchange risk and is a common forex trading strategy for clients who wish to lock in a predetermined exchange rate on a certain date in the future.

The forward contract will specify the exchange of a sum of money at a fixed exchange rate for up to two years in the future.

How Halo Financial can help you manage your currency risk

  • Determining your currency risk strategy: By designing a currency risk strategy customised to your business needs, goals, and risk threshold.
  • Planning your currency risk strategy: A dedicated currency specialist works closely with your business to determine the most appropriate currency risk strategy using market forecasts applicable to currency requirements.
  • Providing a currency health check: this involves reviewing your existing currency risk strategy and identifying any future risk that may impact your business’s bottom line.

The importance of currency risk management

As more businesses go global and require a range of currencies for payments across multiple countries, the need to manage currency exchange risk has increased. With this has come a growing need to have in place a robust currency risk strategy.

Whilst many businesses focus on their operational effectiveness, there is a huge benefit to seeking currency risk management services to mitigate risk and manage a profitable bottom line. For over 16 years, this is one of the many excellent services Halo Financial has offered businesses.

We understand the importance of a comprehensive risk management strategy, offering tailored solutions based on your individual business needs to limit your currency exposure.

Remove the stress of currency trading with Halo Financial’s forex trading strategies

By assigning a personal currency specialist to work alongside your business and create a customised strategy, Halo Financial’s services can help to mitigate your currency trading risk.

We develop an understanding of your business and specific currency requirements to protect you against potential currency risks. Your currency specialist will develop and review your personalised currency strategy to ensure it always meets your business needs and goals.

Register for a free account with us today to manage your risk with a bespoke, informed strategy.