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Hedging
Posted By: TradersLog
Taking a position in a futures market opposite to a position held in the cash market to minimize the risk of financial loss from an adverse price change or a purchase or sale of futures as a temporary substitute for a cash transaction that will occur later. One can hedge either a long cash market position (e.g., one owns the cash commodity) or a short cash market position (e.g., one plans on buying the cash commodity in the future).
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