Plain-English definitions, reviewed by an independent investor
Hedge
A hedge is a position taken to offset risk elsewhere, like insurance that caps a loss at a cost.
A hedge is a position taken to offset risk elsewhere, like insurance that caps a loss at a cost.
(A offsetting exposure, not a formula)
Why it matters
It lets you stay invested while sleeping through volatility.
Common confusion
Hedging always costs something — a drag in calm markets for protection in storms.
Frequently Asked Questions
Give a hedge example?
Holding gold or puts alongside stocks to soften a downturn.
Is hedging free?
No. You trade some upside or pay a premium for the safety.