Hedging is a powerful tool, but it requires a deep understanding of markets and risks.
Emotional Discipline
- Hedging requires composure. Do not succumb to panic or greed, follow a pre-developed plan.
Before applying hedging in real markets, test the strategy on historical data.
Hedging can be a complex process, especially for beginners. Consulting with financial analysts or risk managers can help avoid mistakes.
Understanding Basis
- The basis is the difference between the spot price (current price) and the futures price. Changes in basis can affect the effectiveness of hedging.
Use stop-loss orders for automatic adjustments.
Market conditions change, so it is important to regularly review your hedging positions.
