Contract for Difference (CFD) trading holds the promise of vast profits, but it carries large risks, too, because of how volatile the markets are and how much leverage you use. It's precisely this scenario that makes hedging the most valuable tool in the trader's toolbox. But let's not jump to the why of hedging without first covering the what. What exactly is hedging, anyway? And how can a trader put it to use in the context of CFD trading? At its simplest, hedging is a risk management strategy. It serves to protect against potential losses in one investment by taking an opposite position in a related asset. It's not financial insurance, but it sort of works like that. You're not trying to eliminate risk, but rather manage and minimise it to protect your capital. When it comes to CFD trading, where you can have highly leveraged positions and markets can move swiftly against you, hedging takes on special importance. This is because, in contrast to traditio...
.png)
Comments
Post a Comment