Hedge

An investment made to reduce the risk of adverse price movements.

Detailed Definition

A hedge is an investment designed to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security.

Related in General Trading

ROI (Return on Investment)

A performance measure used to evaluate efficiency.

Derivatives

Financial contracts deriving value from an underlying asset.

Market Maker

An entity providing liquidity by offering both buy and sell quotes.