Direct method of hedging forex risk.

The most direct method of hedging forex risk is a forward contract, which enables the exporter to sell a set amount of foreign currency at pre-agreed exchange rate with delivery date from three days to one year into the future. Accordingly, when using forward contracts to hedge forex risk, US exporters are advised to pick forward delivery dates conservatively or to ask the trader for a window forward which allows for delivery between two dates versus a specific settlement date. Join with ECNCAPITAL to understand forex trading.