Hedging is a risk management strategy used by investors, businesses, and financial institutions to protect against adverse price movements, fluctuations, or uncertainties in financial markets. Hedging involves taking offsetting positions or entering into derivative contracts that act as insurance policies against potential losses in the value of assets, liabilities, or future cash flows. By hedging their exposures, entities can mitigate the impact of market volatility, currency fluctuations, interest rate changes, commodity price swings, and other risks on their financial positions and performance. Common hedging techniques include buying or selling futures contracts, options, forwards, swaps, and other derivatives to offset the risk of adverse price movements in underlying assets or liabilities. Hedging allows entities to manage risk exposure, preserve capital, enhance predictability, and maintain financial stability in volatile or uncertain market conditions, reducing the likelihood of unexpected losses or disruptions to business operations. Understanding hedging strategies and their applications is essential for effective risk management, portfolio diversification, and financial decision-making in dynamic and unpredictable markets.