What is the meanig of HEDGE in forex trading?

In Forex trading you take a position on a currency pair, either long (meaning that it will increase) or short(meaning that it will decrease). Hedging refers to safeguarding your position with an opposite trade on the same pair.

The idea is that one of the positions will make money while the other looses money, once it is clear which one was the correct position you close the wrong one for a small loss. But the goal is that the one that makes money will more than offset the small loss.

The US Futures & Commodoties Exchange Commission recently banned Forex hedging on the same pair for all US based traders. It is still allowed internationally, and US traders can use international trading platforms online to place single pair hedged trades. There are also different currency pairs that have inverse relationships to each other, so US traders can hedge their risk using separate pairs.