What are the advantages of hedging?

01:11 Mins Read

Hedging is a popular trading strategy that helps cap your losses. Curious? Watch the video to know more.

Transcript

What are the advantages of hedging? Hedging your position using futures and options has many advantages. Firstly, it limits your losses and protects your profits Secondly, hedging also increases the liquidity in the financial markets Since traders who practice hedging generally trade in multiple markets like the stock market, the commodity market and the derivatives market. Additionally, hedging saves time for traders like you Because once you’ve hedged your trades, you need not spend much time tracking the asset or adjusting your portfolio. All in all, hedging can be a very beneficial strategy when done right. You can hedge your positions using derivatives, as we saw earlier, And also using commodities or currencies. In the next module of Smart Money, we’ll learn more about these financial markets. Keep reading to keep learning.