What is hedging

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A hedging is an investment that protects your finances from a risky situation. Hedging is done to minimize or offset the chance that your assets will lose value. Hedging refers to buying an investment designed to reduce the risk of losses from another investment.

The Hedging is a financial technique that helps to reduce the effects of measurable type of risk from the future changes in the honest value of commodities, assets and liabilities. Hedging is one investment by investing in some other investment.

Hedging your bet when you are making a risky investment can help to protect you from more losses than you can buy. There are several ways to hedge your investments, one common way is with derivatives or futures contracts. Hedging deals with reducing or eliminating the risk of unpredictability.