0The literal meaning of hedge is protective compound wall built around the house/ the property.
In trading & investment, Hedging is done to minimize the losses and protect the profit earned from fluctuation and volatility caused due to unexpected events in the market.
With proper hedging the risk is reduced to larger extent; without compromising much on the profits.
Without hedging, trader/ investor may incur big losses. When a trader lose in his trades, its not just the loss of money but also a big loss of trader's morale. So, hedge your open position and enjoy the peaceful trading.
