What is Hedging? (Stock Market 101)

So, what exactly is hedging when it comes to the world of stock market trading and investing? This is what we’ll be talking about in this stock market 101 video. Hedging is one of those strategies within the stock market that can be as simple or complicated as you choose to make it. Perhaps you’ve heard of hedge funds before? Those are a group of people that make “hedging” quite complicated. Other people, decide to take a much more simplistic approach to this strategy. Is one strategy better than the other? Perhaps. With that being said, much of how you hedge is going to depend on your personal strategies and risk tolerance levels. The core concept is very easy to understand as it essentially relies on only two words. From there you can get as complicated and advanced as you want. This topic is one that illustrates just why the markets can be so challenging and fun. You can talk to ten different investors about hedging and get ten different theories and approaches about it. This goes to show how there is no one size fits all approach. Everyone has their opinions and approaches to the market! We first just need to understand the basic idea of hedging and that’s what we’ll do here in this video.