What is Hedging? and how to apply?

 ⇧HEDGING⇩

• Hedging is an advance risk management strategy that involves buying or selling an investment to potentially help reduce the risk of loss an existing position.
• Hedging most commonly use in options, futures. 
• EX. Suppose you can purchase 100 share of any company stock at Rs50 per share in January. Month later
• The stock is at Rs45, assume that you do not want to sell the stock, and same time sell PUT option Hedging strategy this position help to big loss converting in to small loss. 
• That work like insurance for Trading capital. 
• 
  Hedging offers traders and investor to limit market risk and volatility. It minimizing potential risk of losses and, it thus gives investors a chance to make profit.