Market Terms

We don't know everything about the markets.  We're just devoted to learners.  Taken from those smarter than ourselves, here's how we define Hedge.

In trading, hedging is opening a position that runs contrary to an existing position.  The main reasons to hedge a position are to protect profit and for short-term gains.  Many brokers and traders hedge themselves and their positions as a way to manage risk and to ensure that any losses will be covered in the event of an unexpected market move.  The hedged amount is usually greater or less than the counter position’s value.  Hedging can also be done to withstand a period of market volatility.