Execution strategies for FX risk management

In order to minimise potentially risky scenarios, there are various execution methods at the broker’s disposal. The broker can pre-define an execution method to apply only to certain order types (Buy Stop, Take Profit etc.) or to specific amounts. Moreover, the broker can set up his general broker profit for each trade or set up fixed or spread-dependent broker profit per instrument, for an execution method. This helps with further increasing profits as well as reduce risks.

Hedging strategies for FX risk management

Eventually, the broker may choose how he would like to hedge when using the execution method he has created. Specific amounts or order types may be more suitable for coverage (A Book) while others will prove better for B Book. This is the first phase of preemptive risk management. Automatic, live risk management tools are in development. Complete with execution behaviors, the broker will be able to avoid risks as well as handle them quickly and more efficiently when they arise.