A ‘hedge’ is an investment or trade designed to reduce risk. The process of reducing risk via investments is called 'hedging'.
Hedge your portfolio with CFDs
How to hedge
Most hedges take the form of a position that offsets one or more positions you have open, like buying an asset that moves inversely with the asset you are holding.
A hedge that removes all risk from a position – except the cost of the hedge itself – is referred to as a perfect hedge, but most traders will only hedge against part of their position.
You can hedge in whichever market you own shares, as we offer a range of global indices including the Australia 200, US 500, US Tech 100, FTSE 100, Germany 40, Singapore Blue Chip, HS 50 (Hong Kong) and more.
Why use derivatives to hedge?
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Highly flexible
Use CFDs to go both long or short, and hedge your risk regardless of which way the market's moving.
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Small initial deposits
Because CFDs are leveraged products, you only need to put up a small portion of the trade's total value.
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An enormous range
With over 17,000 CFD markets to choose from, you should have little trouble finding a hedge.
Find out more about CFDs
3 popular hedging strategies
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Foreign exchange risk
Many people hold shares in US or European markets. But what if the AUD strengthens? Many traders use foreign exchange CFDs to cancel out the effects of currency fluctuations.
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Commodity prices
Let's say you hold shares in some of the big mining firms. Long term, you believe they're a great investment but you're worried about short-term drops commodities. Shorting iron, gold, oil and other CFDs could help limit the short-term impact on your portfolio.
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Stock market volatility
Again, imagine you hold positions in a number of companies - the shares were good investments and your time horizon is 10 years plus. However, the stock markets are trending sharply down and you wish to protect yourself. Shorting with index CFDs could be a sensible strategy.
Let us help you
Do you have a specific position you'd like to hedge? Our highly-trained team can assist you, as well as informing you of what the cost would be.
Alternatively, create an account if you'd like to get started right away.
Why IG
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We are the world’s largest CFD provider,1 and Australia’s No.1 CFD and FX provider.2
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Part of IG Group Holdings, a member of the FTSE 250 with a market cap of £1.98 billion.3
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We have been a market leader since establishing the original IG Group company in 1974.
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IG was the first company to launch CFDs in Australia (July 2002).
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IG has 1000 staff across 16 offices around the world.
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We are authorised and regulated by the Australian Securities and Investments Commission (ASIC), AFSL number 220440.
Open an account now
There's no minimum balance required to open an account and there's no obligation to fund or trade.
The information on this page does not contain (and should not be construed as containing) personal financial or investment advice or other recommendations, or an offer of, or solicitation for, a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of the above information. Consequently any person acting on it does so entirely at his or her own risk. The information does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result.
1 Based on revenue excluding FX (published half yearly financial statements, June 2020)
2 By primary relationships, Investment Trends August 2018 CFD Report & December 2017 FX Report.
3 IG Group Holdings Plc, as at 31 May 2019
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You can also call +61 (3) 9860 1734, email helpdesk.au@ig.com or tweet us at @IGHelpAU
