EUR/USD 1.12160 ▲ +0.39%
GBP/USD 1.34194 ▲ +0.15%
USD/JPY 157.900 ▲ +0.41%
XAU/USD 3949.78 ▲ +1.37%
USD/CHF 0.81963 ▼ 0.40%
AUD/USD 0.70082 ▼ 0.23%
USD/CAD 1.39740 ▲ +0.04%
EUR/GBP 0.83581 ▲ +0.24%
EUR/USD 1.12160 ▲ +0.39%
GBP/USD 1.34194 ▲ +0.15%
USD/JPY 157.900 ▲ +0.41%
XAU/USD 3949.78 ▲ +1.37%
USD/CHF 0.81963 ▼ 0.40%
AUD/USD 0.70082 ▼ 0.23%
USD/CAD 1.39740 ▲ +0.04%
EUR/GBP 0.83581 ▲ +0.24%
ESC

Risk & capital

What is Hedge?

A strategy used to offset potential losses by opening an opposite or negatively correlated position.

Definition of Hedge

A strategy used to offset potential losses by opening an opposite or negatively correlated position. For example, if you are long EUR/USD, you might hedge by going long USD/CHF (which tends to move inversely to EUR/USD) to reduce net USD exposure.

At a glance

Term
Hedge
URL slug
hedge
Category
Risk & capital
Short answer
A strategy used to offset potential losses by opening an opposite or negatively correlated position.
Deep dives
Full A–Z glossary

Example

Example: $1,000 equity and 1% risk = a $10 cash cap. Size from “Hedge” and stop distance, not from a gut-feel lot size.

Common mistake

Common mistake: confusing “Hedge” with advertised max leverage — leverage alone does not set risk per trade.

Professional tip

Tip: write a cash daily loss limit independent of “Hedge”, then let the definition set size only inside that ceiling.

FAQ

A strategy used to offset potential losses by opening an opposite or negatively correlated position.

“Hedge” sits inside capital protection. Ignoring it turns leverage and margin from tools into a path to rapid loss.

Common mistake: confusing “Hedge” with advertised max leverage — leverage alone does not set risk per trade.