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Offsetting Trade

Transaction executed to reduce, neutralize, or close an existing open trading position.

An offsetting trade is executed to neutralize or close an existing position, effectively eliminating market exposure or reducing risk.

In oil markets, traders often enter offsetting trades when managing inventory, hedging forward positions, or realizing profits. For example, a long futures position may be closed with a short futures trade.

Offsetting strategies are central to risk management, allowing traders to maintain portfolio balance while adapting to market fluctuations.

Correct timing and sizing of offsetting trades are critical for minimizing slippage and preserving capital.

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