Re:Bancor Is Flawed
by bboreham on Tuesday June 20, 2017 @03:00AM
(#14592688)
If you exchange now, you risk the price could get better over six months and you missed out.
An FX future has the same currency risk profile as exchanging now. What is different is you trade on margin, and you have interest rate risk in a different currency.
People who actually want to fix an FX rate in the future would use a 'forward', simply a contract to exchange at a later date. Again no change in FX risk.
The true hedge is an FX option, where you can lock in a price (for a fee) yet still back out if you want to.
An FX future has the same currency risk profile as exchanging now. What is different is you trade on margin, and you have interest rate risk in a different currency.
People who actually want to fix an FX rate in the future would use a 'forward', simply a contract to exchange at a later date. Again no change in FX risk.
The true hedge is an FX option, where you can lock in a price (for a fee) yet still back out if you want to.