#BinanceHODLerPLUME Meaning of the word Binance today (hedging)
In cryptocurrency trading, the term Hedging means taking actions to reduce or manage the risks resulting from market movements. In other words, it is a way to protect capital from potential losses if the market moves against your position.
Examples in trading:
Opening two opposing positions: If you buy a certain cryptocurrency (Buy), you can open a sell position (Sell) of the same size to cover the loss if the price drops.
Using derivative instruments: Such as futures contracts (Futures) or options (Options) to lock in the price or reduce potential losses.
Diversifying portfolios: Distributing capital across more than one cryptocurrency or assets to reduce the risks associated with a single currency.
In summary: Hedging is protecting your investments and reducing the impact of rapid fluctuations on capital.