The word hedging refers to a specific investment strategy aimed to minimize the risk of exposure of your capital and its volatility.

There are different situations that allow you to use the hedging. You can apply the hedging with the options of put and call, with uncovered sales ( which consists in not actually having a title, but supposing to having it in a period of time ), with future contracts and forwards.

Hedging strategies have the clear aim to prevent possible and disastrouslosses. For example, if your biggest  investment should not procede as planned, the other movements that follow the hedging strategy will cover the loss or at least part of it.

Virtually, in order to successfully exploit the hedging strategies, you go short on the market with the goal of selling your currency and buy it at better price in the future. To go short means to sell something that you actually do not have. For example, you sell an amount of titles that you do not possess, gaining the corresponding amount of money. From this point on, you owe a broker titles that you did not actually had but that you sold. Therefore, you must buy again these titles, in a certain limt of time, in order to extinguish your debt. The economic advantage is found in the fact that you buy those titles at a better price and gain on the difference.