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What is the difference between hedging and hedging?
Hedging is a hedging transaction, because they have the same meaning, so I think the difference between hedging and hedging is very small. If we have to examine the difference between the two, it is hedging, which focuses more on protecting the price of goods from losses, while hedging transactions are to reduce risks.

How does hedging work? For example, I now buy a batch of soybeans in the market and buy 10 tons. I don't care what I do. Anyway, I bought 10 tons of soybeans, but I'm worried that the price of soybeans will fall in the future. I think if there is, then I will spend this money to buy it now. Am I not expensive? That's definitely impossible. At the same time, I sold 65,438+00 tons of soybeans in the futures market for three months. After three months, if my soybean price goes up or down, my rights and interests will be guaranteed.

If the price of this soybean really drops after three months, it proves that I bought it expensive at that time, and it doesn't matter if I bought it expensive. Because didn't I buy a futures? Futures in three months, because I have soybeans in my hand. I have this position. I sold 10 tons in the futures market, and now I have 10 tons. Why don't I just sell it at this price? Let's hedge this risk. If the price goes up, it will keep my original price, because I have it in stock, so I just won't sell it.

Hedging transaction, hedging refers to the reverse operation of this futures and spot. Now I buy the spot, and then I will sell the futures at the same time. If I buy futures, I will sell the spot, which is the opposite. Although the market is not a market, one is called the spot market and the other is called the futures market, but the transaction between them is completely reversed. Isn't that equivalent to no transaction? Therefore, our trading relationship has been effectively avoided. Due to the price change caused by the time delay, I can keep the current price no matter whether the price goes up or down after three months.