Respond to the following post Hedging is a form of protection when it...
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Hedging is a form of protection when it comes to an individuals finances and is used as a strategy by many investors. Hedging protects these finances in the event of circumstances or situations that result in loss of value. While value may still be lost and cant be guaranteed to be safe from, the losses would be covered by value gains in other forms of investment already set up. There are many various types of hedging methods that an investor can use, not just individually, but a mix of to provide the most protection possible. One of those types are referred to as arbitrage which involves the purchase a product in one market where the price is lower and the immediate sale of it, at a higher price, in another market. This is mostly seen with traders in the stock market. I would imagine that this is less successful in todays age with E-trading, which a lot more investors and individuals use, as the trade orders can be executed quickly, therefore, potentially not allowing one enough time to sell it at a higher price.
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