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Hedging

Definition of Hedging

Hedging is a risk management technique where potential loss is offset by securing a safer, more stable trade. For example, buying stock (risky) and offsetting the risk with commodity (stable) is a common hedging practice in the securities market.

In the derivatives market, hedging is followed by merchants and businesses who want to protect against adverse price movements in commodities or currencies. They do so by entering into a futures or options contract.

Related Terms

Exponential Moving Average

Exponential Moving Average (EMA) is a technical indicator used to follow price trends over a specific period of time. EMA assigns more weight to recent prices than older prices. The formula to calculate EMA is:

Exponential Moving Average = (K x (CP - PP)) + PP

C: Current Price of stock, currency, commodity, etc. P: The EMA of preceding periods K: Exponential smoothing constant

A Simple Moving Average (SMA) is used to calculate the value of the first period. Furthermore, the EMA can be used to identify support and resistance areas. However, it may not be optimal for identifying precise entry and exit points.

Intraday Trading

Intraday trading refers to the buying and selling of financial instruments within the same day. There is no delivery involved in intraday trading as a result. Equity shares are the most popular instrument for intraday day but commodity options and forex futures trading also make it to the list.

Bottom Up Investing

Bottom-up investing is a stock picking strategy that uses analysis of individual companies and shares for decision-making instead of focusing on the broader economy, market, or industry.

Depository Participant

A depository participant is a financial institution that acts as a bridge between a depositories like NSDL/CDSL and investors. Moreover, a depository participant is responsible for holding shares in the Dematerialized format in a Demat account.

At the same time, a depository participant gives traders and investors access to an online trading account that can be used to buy and sell securities. The right depository participant will also ensure that your securities are safe.

Commodity Options

A commodity option is a contract that gives the buyer or seller the right but not the obligation to execute a trade for a commodity like copper, cotton, zinc, and others at a pre-agreed price and date. Commodity options are derivative contracts that require a trader to pay a premium in order to secure the “option”.

At The Close Or Closing Price

At the close or closing price is the last traded price of securities like stocks, ETFs, and others at the end of regular market hours.

For example, if a stock hit Rs. 4,500 at 3.30 PM (market close), then that is its price at the close also known as the closing price.

Unlike Adjusted Closing Price, at the close or closing price does not take into account price changes due to corporate actions.



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*All securities mentioned on this website are exemplary and not recommendatory.

We are bullish on India, we are bullish on India's prospects to be one of the largest economies in the world. We believe that the stock market provides a unique opportunity for all of India's traders and investors to participate in the growth story of the country.

Yet, most investing & trading platforms in India have remained more or less the same over the past decade. Times have changed and retail traders and investors have become smarter about managing their trades and money. Modern traders & investors require an online trading platform that helps them keep up with the technological advancements of our time.

That's why we're building Dhan - to help you trade, to help you invest, and to help you participate in India's growth stock via the stock market with awesome features and an incredible experience.

©2021-2024 Moneylicious Securities Private Limited. All rights reserved. CIN - U74999WB2012PTC184187 Moneylicious Securities is part of Raise Financial Services.

SEBI Stock Broker Registration No: INZ000006031 | Depository Participant (CDSL) ID: IN-DP-289-2016
Exchange Membership No. : NSE: 90133 | BSE: 6593 | MCX: 56320
Registered Office: Office No. 14D, 4th Floor, Shri Krishna Chambers, 78, Bentick Street, Kolkata - 700001, West Bengal, India.
Corporate Office: A-302, The Western Edge I, Off Western Express Highway, Borivali East, Mumbai - 400066, Maharashtra, India. Land Line: 022-43116666.


For any query / feedback / clarifications, email at help@dhan.co.

In case of grievances for any of the services rendered by Moneylicious Securities Private Limited, please write to grievance@dhan.co (for NSE, BSE and MCX) or grievancedp@dhan.co (for Depository Participant). Please ensure that you carefully read the Risk Disclosure Document as prescribed by SEBI, our Terms of Use and Privacy Policy. Compliance Officer: Mr. Manish Garg and Mobile: 8655740961 Email: complianceofficer@dhan.co To lodge your complaints using SEBI SCORES, click here.


Procedure to file a complaint on SEBI SCORES: Register on SCORES portal. Mandatory details for filing complaints on SCORES: Name, PAN, Address, Mobile Number, E-mail ID. Benefits: Effective Communication, Speedy redressal of the grievances


Disclaimer: Investment in the securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed the SEBI prescribed limit


Attention investors:

  1. Stock brokers can accept securities as margins from clients only by way of pledge in the depository system w.e.f September 01, 2020.
  2. Update your e-mail and phone number with your stock broker / depository participant and receive OTP directly from depository on your e-mail and/or mobile number to create pledge.
  3. Check your securities / MF / bonds in the consolidated account statement issued by NSDL/CDSL every month.

Note: As a policy we do not give stock tips or recommendations and have not authorized anyone to give this on behalf of us. If you know anyone claiming to be a part of Dhan / Moneylicious / Raise or our associate companies or partners and offering such services, please report us on help@dhan.co. Important Information for Investors: To prevent unauthorized transactions in your trading / demat account, do not share your account details, credentials or any personal details with anyone. Keep your mobile number updated with your Stock Broker, Depository Participant and ensure that the same is registered with Stock Exchanges, Depository and KRAs. You will receive alerts and information on your registered mobile number / email for debit and other important transactions in your demat account directly from CDSL / Exchange on the same day. KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (Stock Broker, DP, Mutual Fund, etc.), you need not undergo the same process again when you approach another intermediary. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account. This is issued in the interest of investors.


Moneylicious Securities Private Limited also known as Dhan is only an order collection platform that collects orders on behalf of clients and places them on BSE StarMF for execution. Client expressly agrees that Dhan is not liable or responsible and does not represent or warrant any damages regarding non- execution of orders or any incorrect execution of orders with regard to the funds chosen by the client or due to, but not being limited to, any link/system failure, delay in transfer of the funds on account of any unforeseen circumstances/issues in the banking system/payment aggregators or any other problems that may result in a delay in crediting the funds into the BSE Star MF's bank account.


Mutual fund investments are subject to market risks, read all scheme related documents carefully before investing. Dhan is not a distributor or agent of any mutual fund. Mutual Funds are not exchange-traded products. Any related disputes will not have access to the Exchange-investor redressal forum or arbitration mechanism. For other disclaimers please refer https://dhan.co/advertisement-disclaimer/


Download client registration documents (Rights & Obligations, Risk Disclosure Document, Do's & Don'ts) in vernacular language: BSE | NSE | MCX


Kindly, read the Advisory Guidelines of BSE | NSE | MCX for investors as prescribed by the exchange with reference to their circular dated 27th August, 2021 regarding investor awareness and safeguarding client's assets


Important Links: SEBI | BSE | NSE | MCX | CDSL | SCORES | ODR Portal | Investor Charter for Stock Brokers | Investor Charter for DP | UCC Advisory | e-Voting for Shareholders

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