What is the difference between locking and hedging?
Most novice traders mistakenly believe that locking and hedging open positions are no different.
In fact, these techniques have an identical purpose - risk diversification, but the methods for achieving the task are fundamentally different.
What is hedging and how to use it?
Hedging involves opening two or more trading positions on assets with a zero correlation coefficient, that is, the pricing of these financial instruments does not depend on each other.
To understand the principle and feasibility of using hedging in practice, several examples should be considered:
1. The simplest and most well-known strategy for trading stock assets is “ Buy and Hold ”.
The optimal structure of the investment portfolio is the distribution of deposits between shares of reliable international companies and government bonds in a ratio of 70 to 30.
Warren Buffett 
himself adheres to this trading tactic .
2. When trading futures, hedging risks by purchasing an option after placing an order is popular.
An option is an agreement between the buyer and seller of a liquid financial instrument at a predetermined value at a certain time.
As a rule, the price of the asset corresponds to the market price at the time of signing the contract. This value is final and does not depend on the market value at the time of the actual transaction.
The period for the sale of the asset is established in the contract and can be either a month or several years. Such transactions are interesting to both parties. Concluding an options contract for a trader is a reliable way to protect funds.
More information about hedging - http://time-forex.com/terminy/hedging-na-forex
The essence of locking
Locking orders can be called a type of hedging, which is popular mainly among Forex traders.
The use of this tactic is necessary to record the current financial result and is often used in order to meet the broker's margin requirements and prevent the forced closure of unprofitable orders.
To do this, the trader opens a second transaction on the same currency pair with an identical volume.
As a result, the financial result is fixed, and closing orders is not required. The use of this tactic is only permissible as a last resort and is not recommended for novice traders. Thus, locking differs from hedging in that both transactions are opened on the same financial instrument in opposite directions.
Important!
If locking was implemented on a pair with negative swaps, then this will lead to a stable loss of funds in the medium term. If the swaps are positive, then a similar method can be used to generate passive income.
To do this, it is recommended to pay attention to currency pairs with a negative correlation coefficient.
Practical examples of locking - http://time-forex.com/praktika/lokirovanie-forex
Conclusion
Hedging and locking are used by traders to reduce trading risks to a minimum.
The use of such tactics in practice does not involve making a profit. The main purpose of locking is to record the financial result of open orders without the need to close them.
Hedging involves opening transactions on independent instruments to insure orders with moderate risks. And profit is obtained using other instruments, for example dividends - http://time-forex.com/inv/zarabotok-akcii