– Glossary

Hedge

A term used to describe reducing risk associated with adverse market movements by using two counterbalancing investments, thereby minimising any losses caused by price fluctuations. For example, if you sell a house in Holland to relocate to the UK (your new base currency), you are in a long Euro (EUR) position and short Pounds Sterling (GBP). To offset this position you would need to sell the equal amount of EUR to make up for the short GBP position.

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