A subscription-based service that offers investment strategies, Mad Hedge Fund Trader shares the insights of industry veteran John Thomas. Emphasizing a fundamental research approach, Mad Hedge Fund Trader provides consultation in areas such as hedging strategies.

In the case of stock or investment portfolios, hedging typically uses an instrument to mitigate risk by acting as a counterweight to a devalued portfolio. As a portfolio loses value, the hedged holding will appreciate and chart an upward trend. In addition to stock volatility, hedging can help assuage risks regarding currency movements, vehicle duration, inflation, and interest rates.

One way to hedge is to purchase diversified assets, including instruments tied to specific indexes. A more direct type of hedging utilizes short selling, which involves the sale of a security that is borrowed by the seller instead of owned. It is sold in the market when decline is expected, enabling the seller to profit later by repurchasing the security when its price drops and keeping the difference. The inherent risk is that upward market movements can magnify losses. Put options are similar alternatives that also allow buyers to sell or purchase an asset at a specified price, and there are numerous instruments for these as well.