Hedging vs speculation. Hedging is a risk management technique, while speculation is a risky trading strategy. While hedging is focused on risk reduction and stability, speculation embraces risk in pursuit of higher returns. . Both approaches have their advantages and disadvantages, and the choice between them depends largely on a trader’s risk tolerance, investment goals, and market knowledge. Hedging involves taking positions to reduce or offset potential risks and losses, while speculation involves taking positions to profit from market movements. Feb 13, 2025 ยท Explore the nuanced distinctions between hedging and speculation in finance, focusing on their purposes, market roles, and accounting implications. In this article, we will discuss the functions of hedging and speculation, their market effects and how to select the right approach. Learn the key characteristics and differences between hedging and speculation, two distinct strategies used in financial markets. Hedging is a risk-averse strategy to protect an investment from price movements, while speculation is a risky strategy to profit from price changes. Learn the key differences between hedging and speculation, two terms related to futures contracts and price movements. slgkku twtkind ixfszup ujikkw lyav zmka mldty gptt cluuz qaevj