Why Hedge? Hedging is the taking of a position,acquiring either a cash flow,an asset,or a contract (including a forward contract)that will rise (fall)in value and offset a fall (rise)in the value of an existing position. While hedging can protect the owner of an asset from a loss,it also eliminates any gain from an increase in the value of the asset hedged against.Why Hedge? Hedging is the taking of a position, acquiring either a cash flow, an asset, or a contract (including a forward contract) that will rise (fall) in value and offset a fall (rise) in the value of an existing position. While hedging can protect the owner of an asset from a loss, it also eliminates any gain from an increase in the value of the asset hedged against