Glossary · from the DESK dictionary
Hedging
A risk-management strategy involving positions taken to offset potential losses from adverse price movements in another asset.
In plain words
Functions like insurance against unwanted market movements, often using derivatives.
What it means for traders
An absolutely central risk-management concept across nearly every area of finance.
Common pitfalls
Reduces not only loss potential, but typically also profit potential.
Related terms
Hedging Transaction · Dynamic Hedging · Hedge Ratio · Hedger vs. Speculator
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.