Risk Management 5 min read
Hedging in Trading
Expert Analyst
Raffiq SR
Last Updated
5/16/2026
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Hedging Strategies Guide
Hedging is an investment that is made with the intention of reducing the risk of adverse price movements in an asset. It is essentially an insurance policy for your trades.
Common Hedges
- Protective Put: Buying a put option for a stock you own.
- Shorting Futures: Selling futures against your long portfolio.
- Pairs Trading: Going long on one stock and short on another in the same sector.
Strategy FAQ
Does hedging reduce profit?
Yes, it acts like a cost (insurance premium), but it protects you from catastrophic losses.
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