What is the micro -pursuant?

Micro-HEDGE is a technique that allows investors to compensate for the risk of one particular safety it currently holds. This is the opposite of the macro-insurance that occurs when the investor tries to ensure the risk associated with its entire portfolio. The use of micro -science relieves damage that can be caused by one security failure, such as a single supply. Some of the strategies for microodicas include the use of derivative contracts intended to sell the security or purchase of other security in the inverse relationship to ensure security.

All investments are accompanied by different levels of risk. If the investor includes a well -diversified securities portfolio, these risks can be effectively controlled. There are some times when the only security in the portfolio may be the cause of great concern. It could be because security is a stock that is very expensive, or because it is security with the history of volatibility. Whatever the case, meIt can be an effective way to deal with these securities.

It is important to understand that the micropicid is designed to alleviate the risk associated with only one security. Therefore, this technique cannot protect the entire portfolio. Instead, it can be used to prevent a single stock or other security to cause too much a negative impact. If the investor insists to keep potentially problematic shares, perhaps because of his potential or because of dividend rights or other benefits that the investor has, if the investor insists to hold potentially problematic shares.

derivatives are one way to compensate for a risk by micro-insurance. These contracts, which allow investors to speculate on securities' prices without paying the full price for their purchase, against security that is to ensure. For exampleThe choice of the contract provides an investor to sell specific shares, if it reaches a certain price, can be used to protect the investor, if it holds this share and is afraid of a price drop.

Another way to the micro-dial is to find securities that work in an inverse ratio to each other. This means that as one security rises in the price, another tends to fall prices. As an example, if the investor holds shares A and shares B tends to move in an inverse proportion to actions A, buying shares B is a good way to ensure shares A. The only problem with this strategy is that it is rare, that an inverse relationship can be found.