What is hedging?

When a currency trader enters into a trade with the intention of protecting an existing 
or anticipated position from an unwanted move in the foreign currency exchange rates, 
they can be said to have entered into a forex hedge. 

By utilizing a forex hedge properly, 
a trade that is long (buy) in a foreign currency pair can protect themselves from down 
risk, while the trade that is short (sell) in a foreign currency pair can protect against 
upside risk. 

The primary methods of hedging currency trades for the retail forex trader are through spot contracts and foreign currency options. Spot contracts are the run of the mill trades 
made by retail forex traders and because spot contracts have a very short term delivery 
date (two days), they are not the most effective currency hedging vehicle. 

In fact, 
regular spot contracts are usually the reason why a hedge is needed.

Foreign currency options are one of the most popular methods of currency hedging as 
with many options on the other types of securities, foreign currency options give the 
purchaser the right, but not the obligation, to buy or sell the currency pair at a particular 
exchange rate at some time in the future. 

Regular options strategies can be employed, 
such as short straddles, long strangles and bull or bear spreads to limit the loss potential 
of a given trade.

We bought and sold USD/JPY at the same time, one might conclude it is a contradiction 
but it is not, this is part of hedging because the aim is to minimize the risk as we do not 
know the direction of the market, as soon as one of the trades starts making profit we 
are going to close the other one which is on a loss, then start engaging in long term 

trades in order to make more than what we lost.