Using hedging strategies to manage risk involves taking positions in financial instruments that offset potential losses in other investments, thereby reducing overall risk exposure. Hedging strategies can be implemented through various techniques, such as buying options, futures, or other derivatives, to mitigate potential losses in a primary investment. For example, a trader holding a long position in a currency pair can hedge against potential losses by buying a put option or selling a call option, which would provide a profit if the currency pair's value declines. By using hedging strategies, traders can limit their potential losses, protect their profits, and maintain a more stable portfolio, even in volatile market conditions.