Auto Hedging
Automated hedging is the use of computer algorithms to execute trades in order to reduce or eliminate risk in a portfolio. The goal of automated hedging is to automatically adjust a portfolio's exposure to certain risks, such as interest rate or currency risk, using financial instruments such as derivatives. Automated hedging can help investors to manage risk more efficiently and effectively, by removing the need for manual intervention and allowing for faster and more precise execution of trades.
It is important to note that automated hedging is not a substitute for a sound risk management strategy, but rather a tool that can be used to enhance it. It is also important that the algorithmic trading system is well designed, tested and supervised to ensure it is functioning correctly.
In order to implement automated hedging, investors typically use specialized software or algorithms that are designed to monitor market conditions and execute trades automatically. These algorithms can take into account a variety of factors, such as historical data and current market conditions, to make decisions about when and how to execute trades. Automated hedging can also be done using machine learning techniques, where the algorithm learns from the market data and adapts its decision-making process over time.
Spread Trader application enables you to create and execute custom hedging strategies with the logic of any complexity. Manage your hedge orders in real time.