What does Hedge mean

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What does Hedge mean

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It is nothing but making an investment to reduce the risk of undesirable price movements in an asset. In general, a hedge consists of taking an offsetting position in a related security, such as a futures contract.

A best example of a hedge would be if you owned a stock, then sold a futures contract stating that you will sell your stock at a set price, therefore avoiding market fluctuations.

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