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Trading Glossary

Hedge

The Hedge is the investment or the trade designed is reduced your exposure to the risk. The process of reducing risk through investement is called Hedging. Hedging can come in many forms, however, like buying an asset that tends to move inversely with the asset you are holding.A hedge that removes all risk from a position except the cost of the hedge itself is referred to as a perfect hedge, but most traders will only hedge against part of their position.