Offsetting transaction definition
An offsetting transaction is a trade that cancels or offsets some or all of the market risk of an open position.
Offsetting complex transactions explained
An offsetting transaction could entail closing a position to cut a losing trade, or taking a contrary position on the same asset, like a hedge. Unless the market is ranging, taking a contrary position while leaving open a losing position when trading in the opposite direction is a risky strategy, as the losing trade may quickly become unmanageable.