A guide to reading and acting on our Castle Currency Weekly Hedge Strategies.
The rate has not reached our target zone. Consider waiting for a better level before placing any hedges or converting.
The rate is between zones. We expect rates could move either higher or lower from here. Consider acting only for near-term operational needs.
The rate is at or near our target zone. Consider this level to place your forward hedges or convert for near-term needs.
For Medium-Term Strategy I, the signal also shows your current hedge percentage. The bar beside the traffic light indicates how much of your exposure to hedge at the current rate level.
Our target levels are based on interbank currency prices shown on our live charts.
At the start of each month we set an Upper Target and Lower Target for the month. When the rate reaches the Upper Target - or is otherwise favorable to your position - consider converting your near-term cash needs and placing any forward hedges required for the next 30 days.
Covers forward hedges obligations one to three months out. We define a Prime Zone - the rate range where we recommend placing hedges - and a Sub-Prime Zone where we recommend waiting.
This strategy uses a graduated hedge percentage approach. As the rate moves into more favorable territory, you increase your hedge percentage. Five levels are defined - from 0% hedged to 100% hedged - each with a corresponding target rate range. On a rolling basis, top up your hedges each time the rate re-enters your target range.
Covers forward hedges obligations three to twelve months out. We define a Prime Zone - the rate range where we recommend placing hedges - and a Sub-Prime Zone where we recommend waiting.
For obligations two years out. Consider placing up to 50% of your required hedges when the rate is above our target level. We recommend capping at 50% for this horizon given the uncertainty over longer time frames. Top up on a rolling basis when the rate returns to the target zone.
Rather than trying to watch the rates throughout the week, subscribe to our Alerts. When the rate reaches one of our Targets, you receive an SMS and email notification. You decide to act and how much - we just make sure you know when the rate is there.
A common question is whether placing a forward hedge is speculating. Once you have a foreign currency obligation you have risk of the rate changing. You have a choice - lock in the rate and have certainty, or leave it open and the change will either work for you or against you. Most businesses make this an all-or-nothing decision. Our strategies - built on 30 years of currency market experience - offer structured guidance on when to hedge, how much, and at what levels, so you are not guessing and not overcommitting. You have expected foreign transactions 3, 6, 12 months out and more - having a plan for these transactions removes the uncertainty. Doing nothing when you have real exposure can actually be considered speculation - you are hoping the rate does not move against you.
Note that placing hedges can add financial strain to your business if rates move against you before settlement. Always hedge only the amount you have a high degree of certainty you will need. For horizons beyond two years, we recommend hedging no more than 50% of your expected variable exposure.
Every business has a different cost structure, a different budget rate, and different exposure across time horizons. Our standard strategies set the framework - Custom Margin Protection goes further.
We build a strategy around your specific budget rate, transaction schedule, and risk tolerance. You get defined rate floors, structured entry points, and a clear plan for every time horizon. Available to Premium Strategy subscribers.
If you are unsure which strategy fits your business, how much to hedge, or when to act, reach out directly. This is exactly the kind of conversation Castle Currency was built for.