Hedging is to avoid the risk of price fluctuation and hedge the risk of price fluctuation of spot government bonds. Hedging can be divided into long hedging and short hedging.

Long hedging, also known as buying hedging, means that investors who are going to invest in government bonds in a certain period in the future are worried that rising prices will lead to an increase in the cost of buying government bonds, and first buy a futures contract in the government bond futures market to hedge the uncertainty of future prices.

Short hedging, also known as selling hedging, means that investors are prepared to sell treasury bonds in a certain period in the future and are afraid of falling prices and suffer losses, so they sell a futures contract first and then buy an equal amount of futures contracts to hedge against price uncertainty.