Hedging
Plain definition. Hedging means buying a security to offset a potential loss on another investment, which FINRA describes as one way investors can manage risk.
Technical definition. FINRA’s investor guide on risk defines hedging as buying a security to offset a potential loss on another investment, and it lists hedging alongside insurance products as an additional way to manage risk. FINRA notes that hedging typically adds, often significantly, to the costs of an investment, which can eat away at returns. It also says hedging typically involves speculative, higher risk activity such as short selling, trading in complex products such as options, or investing in illiquid securities.
On this site
On this site, Hedging comes up in Why do market makers hold XRP, and are they betting on its price?, What is a hedged XRP carry trade, and is anyone running one? and Does one dollar of XRP support more than one dollar of financial activity?.
Source
Risk | FINRA.org (finra.org), read October 1, 2026.