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Costs & risk

Hedging

Hedging is opening a position that offsets some or all of the risk of another one. On platforms that allow it, this can mean holding a long and a short position on the same instrument at the same time; each position keeps its own costs.

Also called: hedge, hedged position

Hypothetical example

Hypothetically, you hold 1 lot long EUR/USD and open 1 lot short. Further moves no longer change your overall result, but you pay the spread on both trades and swaps on both while they stay open.

Used in these guides

Basics8 min read
Going long and short: how buy and sell trades work
A long trade gains if the price rises; a short trade gains if it falls. Both lose money when the price moves the other way.

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