<p><strong>Hedging</strong> is an advanced risk management strategy in trading where a position is opened that is opposite to an existing one, with the aim of reducing potential losses. This is typically done by taking a position that would profit from the same market conditions that would cause a loss on the original position.</p>
<p>Hedging matters because it allows traders to limit their downside risk, protecting their capital and ensuring that they don't lose more than they can afford to. For example, a forex trader who has bought EUR/USD might hedge this position by selling EUR/USD, so that if the EUR falls, they will make money on the sell order, offsetting some of the loss on the buy order.</p>