$BTC $ETH $SOL What is Hedging?

What is Hedging in Trading "Hedging"

Hedging is the practice of holding multiple positions at the same time to protect your trading or investment portfolio from volatility or uncertainty within the financial markets. This involves offsetting losses in one position with gains from another.

This means that if the value of one financial asset declines, the value of the other financial asset is likely to increase, which can help offset any risk from the declining position with a profit. These investment decisions should not be rushed and require a lot of thought and analysis beforehand.

Hedging is typically a risk management strategy used by short- and medium-term traders and investors to protect against unfavorable market movements. Many long-term investors never use hedging because they tend to ignore short-term volatility completely, but it is still important to learn more about hedging because it can have a range of different applications