DEFINITION of 'Legging In'

1. Setting up the entry position of a complex financial investment separately from setting up the exit or unwinding of the position.

2. When a debtor or creditor enters into a hedging contract after the debt instrument has been issued or acquired in order to lower financial risk.

BREAKING DOWN 'Legging In'

Legging in is a common practice used to lower risk when buying and selling commodities futures contracts. Any gain or loss as a result of the legging-in hedging strategy is deferred until the qualified instrument matures, at which time it is either disposed of or otherwise terminated.

Legging in can also refer to a slow paced investment strategy characterized by numerous continued buy/sell orders rather than entering/exiting into a position in bulk amounts.

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