How do you hedge your portfolio? Just as any solid investment strategy is going to include everything from exit strategies, buy and sell prices, and diversity, it is also going to hedge against loss or risk. Though there is no formula for just how much of your portfolio you should protect with hedging, it is safe to say that you should use this sort of strategy whenever it is feasible.

After all, not all hedging maneuvers are going to be as effective as the rest. For example, classic investing advice posits hedging against riskier options through the use of commodities such as gold and silver (live gold charts). Long known as slow growth assets, their value is solid enough to provide investors with a go-to solution for protecting a portion of their wealth.

Modern technologies make it easier than ever to invest in this area, with paper as well as hard assets available with just a few clicks of the mouse. However, with the widespread use of technology comes alternative forms of hedging, and chief among them is the latest investment, known as binary options.

Binary Options and Hedging

As an investor or active trader, you know all of your current positions and you track them daily on a scheduled basis. This keeps you fully informed and tells you when to take action on any of your holdings. As one options expert points out, you can supplement “your existing trading portfolio by hedging your current positions in the markets with binary options.”

Here is what they mean: You currently have specific investments in the forex market and intend to make some changes within the next day or even the next few hours. You do this because you know that certain currency pairs are going to experience measurable shifts. Selling off holdings in one position in order to exchange them for another strengthens your position and yields good returns.

Why not use this knowledge in binary options? Investors can use tactics such as boundary options or even touch or no-touch options and position themselves to benefit from the changes they know are coming. Not only does this enhance the value of your portfolio, but it can also be used to offset a riskier holding in another currency or another asset group altogether.

While binary options are not a sure thing when used as a tool for hedging against risk or loss, they are extremely useful. They allow the investor to create strategy and use tactics based on solid facts and on their current positions in the market. With expirations as quick as 60 seconds, the contracts are readily available and are one way to earn a supplementary income. Do the research, choose your asset, and rely on binary options for a solid hedge or dependable strategy.