Explanation of hedging (original) \x0d\ The basic principle is: \x0d\ 1 The futures price and the spot price are basically synchronized \x0d\ 2 Give up a chance to make a profit, and finally achieve the purpose of avoiding risks and locking in profits. \x0d\ Give two examples: \x0d\ One: You are the owner of a textile factory, you receive an order, and a customer needs a batch of cloth for six months. Your raw material is cotton. If the cost is calculated according to the current cotton price, the result is profitable. So you buy cotton futures contracts (open positions) in the futures market, and the quantity you buy is equivalent to the order quantity. According to the delivery date, if you want to start production in a few months, buy the cotton you need in the spot market and sell the cotton contract (close the position) in the futures market. The sales amount is equal to the contract amount of cotton you bought before. If the price of cotton has gone up in the past few months, the cotton you bought in the spot market is more expensive than before, which means that your cost has increased (lost), but your trading in the futures market is profitable, and theoretically the profit and loss are basically balanced. That is, you avoid the risk of raw material price fluctuation and lock in the cost. On the other hand, if cotton prices fall, spot profit and futures loss will also break even. This is the price you pay for "avoiding risks and locking in costs": giving up the extra profits you may get. \x0d\ 2: You are a farmer. According to the current cotton price in the market, you think it is profitable to grow cotton, so you decide to grow a certain amount of cotton. Your product is cotton, so if you sell the cotton futures contract delivered six months later in the futures market, the selling amount is equivalent to your planting amount. During the cotton harvest period, you sell your cotton at the current market price in the spot market and buy cotton contracts in the futures market. The profit and loss situation is the same as above. This means that you avoid the risk of product price fluctuation, lock in the predetermined profit, and give up the possible extra profit as the price. \x0d\ popular enough? ! Ha ha.