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how to hedge a stock or etf bet in anticipation of an event

I have lost money frequently trying to place trades in anticipation of an event passing eg. interest rate rise or agreement on oil production from Opec etc., and then the event fails to pass. I have now stopped trying to trade in anticipation of events passing and wait for them to actually pass before placing a trade.
Is there a hedging technique with stocks, etfs, inverse or leveraged etfs, options etc that would allow you to place a trade bet in anticipation of an event passing such that if the event passes you have a nice profit and if the event fails to pass you only suffer a small loss??
Basically I am asking how to hedge a trade bet so if it is successfully you have a decent profit, but if it fails you don't have a devastating loss.


  • in thinking about the question I placed I came up with one simple technique and that is placing a conditional one triggers the other order with a buy limit order and sell stop limit order where the stop is placed 2% below the purchase price and the limit 2.5% below the purchase price.
    So if your stop limit order is successful then your max loss is 2.5% which is acceptable to me. However the stop limit order runs the risk of being bypassed if the trade drops rapidly and falls below the limit without the limit being triggered so what are other, more sophisticated techniques?
  • markdmarkd mod
    edited September 2016
    Here's an Investopedia article on options. See the "Protective Put" section about two thirds down the page.

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