#firstdealofthenewyearFateema Hedging is a risk management strategy used to mitigate potential losses or gains from an investment or position in a security or assets that offsets or reduce the risk of another investment or position. Purpose of Hedging 1.Risk reduction: Hedging can help reduce potential losses from an investment or position 2.Volatility reduction:Hedging can help reduce the volatility of an investment position. 3.profit protection: Hedging can help protect profits from an investment or position.