What is Hedging ?

Hedging is the process of protecting oneself against risk. It is trying to reduce uncertainty by buying (or selling) something in a futures market.

An example of a hedge would be if you owned a stock, then sold a futures contract stating that you will sell your stock at a set price, therefore avoiding market fluctuations. Investors use this strategy when they are unsure of what the market will do. A perfect hedge reduces your risk to nothing (except for the cost of the hedge).

A hedge is an investment position intended to offset potential losses/gains that may be incurred by a companion investment. In simple language, a hedge is used to reduce any substantial losses/gains suffered by an individual or an organization.

A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of over-the-counter andderivative products, and futures contracts.

An example of a hedge would be if you owned a stock, then sold a futures contract stating that you will sell your stock at a set price, therefore avoiding market fluctuations. Investors use this strategy when they are unsure of what the market will do. A perfect hedge reduces your risk to nothing (except for the cost of the hedge).

Hedging is a position taken in a particular market in an attempt to compensate for exposure to price fluctuations in another market in order to minimize exposure to undesirable risks. There are many financial determinants to achieve this goal, including insurance policies, futures, barter, options.

A hedge is an action to secure the position in an investment in order to reduce the risk of adverse price movements in an asset. 

Hedging is the process of balacing risk on timely basis

Hedging is an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as future contracts.

Basically, the purpose of the introduction of derivatives was reduce the risk through hedging but the lack of information and knowlege the people are not able to use it properly.  Now it is commonly used for speculation purpose Hence, sometime it makes a cause of market or economy collaps but through a good strategy we can use the derivatives as a good hedging tool.

a method used to avoid the downward value of a product in the risk market.

Shield against business risks.

hedging is used to reduce the risk ....for example we use  futures to reduce the risk related to currencies and interest

To describe hedging in a crude or simple way is like buying insurance to protect against risks. That is why hedging acts as a cushion to soften any impact if disposal othings did not turnout as anticipated. Hedging cost is expensive. It can "save" as well as cause "loss". It will save if prices goes down, etc. However if prices rise much more than anticipated, then you can only dispose at the price that was agreed earlier, which can be much lower if no hedging in the first place. Classic example of hedging is forward booking of exchange rate or foreign currency.

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