Micro-hedging allows you, as an investor, to leverage targeted risk mitigation. With this solution, you can protect yourself against specific exposures rather than interfering with your entire portfolio, which is often costlier. It also makes it easier to mitigate short-term event-specific risks.
Having said that, not all financial instruments are ideal for micro-hedging. When it comes to CFDs, the best ones are USD/CAD, oil, and gold. Here’s an overview of how micro-hedging with these assets works.
USD/CAD
The USD/CAD is one of the best currency pairs for hedging against risk. Over three-quarters of Canadian exports go to the US, and a significant portion of the involved goods are priced in USD. If you run a business that frequently exports to the US, you are often exposed to fluctuations in the US dollar versus the Canadian Loonie. Luckily, you can hedge the USD/CAD pair and protect yourself against unexpected swings. How?
Suppose you plan to export goods worth $100,000 to the US, and then the CAD suddenly strengthens against the USD. You’ll end up receiving fewer CAD and losing some revenue. To minimize damage and offset losses, you can go short USD/CAD with regulated forex brokers in Canada, ensuring you’ll gain from this open position if the CAD strengthens against the USD while you’re importing to the US.
Oil
The Great White North is a major oil exporter. As of 2025, this country is the 5th largest crude oil producer in the world. The United States alone imports over 4.3 million barrels of this product from Canada every day. When the price of oil rises, the Loonie often experiences a significant spike, and vice versa. That said, this commodity is one of the best for micro-hedging.
Oil (WTI) CFDs can help you mitigate revenue losses if you’re an exporter. If you expect oil prices to fall, all you have to do is short WTI CFDs. This financial instrument is also essential for investors who want to stabilize their USD/CAD exposure. When oil rises, the USD/CAD falls (with CAD strengthening), allowing you to reduce risk exposure by shorting WTI CFDs.
Gold
Gold has maintained its safe-haven status for a long time, for good reason. This precious metal has a long history of keeping its intrinsic value. Moreover, it’s not tied to a single economy or currency, so its odds of being directly affected by aspects such as rising or weakening USD or CAD prices are often extremely low. If you can’t buy gold, you can still leverage the asset’s safe-haven qualities with gold CFDs.
Micro-hedging with edge is advisable when you expect volatile conditions but don’t want to let go of your investments. Suppose you have several open equity positions and anticipate that global tensions will soon lead to market downturns. You can protect your portfolio by going long on gold CFDs. Rising tensions will prompt many to seek refuge in gold, driving up gold prices and yielding substantial gold CFD gains.
Start Micro-Hedging Today
Canada is home to everything from the best whisky distilleries to millions of financial investors. If you’re an investor in this region, consider micro-hedging with USD/CAD, oil, and gold CFDs. While doing so, match each hedge size to your actual exposure. Also, understand the correlation between the assets you currently own and those you plan to micro-hedge beforehand. Don’t forget to keep a close eye on critical events such as OPEC meetings and geopolitical conflicts.
