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TeachMeFinance.com - explain Hedge Hedge -- To reduce one's risk of loss by compensating transactions on the other side. For example, buy goods for future delivery priced in a foreign currency. Hedge by buying the foreign exchange needed at the rate then in effect. Or, another way of hedging is to buy a forward exchange contract. In both cases the buyer will have a known cost in its own currency. This is a hedge against the risk of foreign exchange fluctuation; it is not a hedge against a change in the price of the goods. About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2005 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.