The main idea of hedging is to open an opposite position to offset potential losses from the current position.

For example:

▪️A trader has a long position in BTC of 1 BTC.

▪️To hedge it, he opens a short position also of 1 BTC.

▪️If the price of BTC falls, the losses on the long position are offset by the profits on the short position.

Hedging allows for locking in profits on a favorable position and avoiding significant losses. This is a more conservative approach to trading and investing.