Hedging is a risk management strategy used to offset potential losses in investments by taking opposite positions in related assets or derivatives. Common hedging instruments include futures, options, and inverse ETFs. For instance, a long position in a stock can be hedged by buying a Put Option or selling a Futures contract. Investors hedge to protect portfolios from downside risk, especially during uncertain markets or event-driven volatility. Delta hedging involves adjusting positions to maintain neutrality, while protective puts and covered calls are popular among retail traders. While hedging reduces potential losses, it also limits upside gains and comes at a cost (e.g., option premium). Effective hedging requires a clear understanding of correlation, risk exposure, and position sizing. For institutional players, portfolio insurance via index options is a standard practice. Retail traders must learn to hedge selectively and avoid over-hedging.