What is Hedging? What are the benefits of Hedging?

What is Hedging? What are the benefits of Hedging?

Hedging is a standard practice followed in the stock market by investors to safeguard themselves from the losses that might arise from market fluctuation using financial instruments or market strategies.

Benefits: 
Hedging protects the profits of the investor and limits the losses to a great extent.
Hedging offers flexible price mechanism as it requires very less margin outlay.
It increases the liquidity of the financial markets as hedging prompts the investor to trade across different assets.


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