In hedging transactions, the biggest risk is false hedging, that is, futures speculation in the name of hedging, such as no position in the spot market, unilateral trading in the futures market, or the spot has been sold and the futures position has not been closed. Investors participate in the futures market for two purposes: first, to make profits by speculation; The second is to participate in hedging transactions and transfer the risk of price fluctuation. For enterprises, hedging and avoiding the price risk in the spot market should be the main purpose. Enterprises participate in hedging through the futures market, which can effectively transfer the operational risks brought by spot price fluctuations, lock in the production and operation costs, and realize the expected profits. In the process of participating in futures trading, we should pay attention to the following principled errors: 1. The basic principle of hedging transaction is that futures and spot market positions are equal in number and in opposite directions. Only when the number of positions is equal can hedging achieve satisfactory hedging effect. If investors make the mistake of hedging too many positions, the hedging operation may fail and even bring disastrous losses to the enterprise. 2. Too much capital investment For an enterprise, if the capital invested in the futures market accounts for too much of the assets owned by investors, or if too much money is used in each transaction, it is beyond the risk range it can bear, and once it fails, it will be in trouble. Numerous facts have proved that excessive capital investment can easily lead investors to bear the risk of large fluctuations in market prices, and even fall into morbid psychology, and some will replace rational investment with gambling behavior, resulting in serious consequences. 3. Obviously hedging is actually speculation. The essence of hedging transaction is to replace the risk of spot price change with the risk of futures and spot price basis change, so the result of hedging may be complete hedging, or a part of profit or loss. But generally speaking, most hedging can avoid the risk of price changes to a certain extent. In hedging transactions, the biggest risk is false hedging, that is, futures speculation in the name of hedging, such as no position in the spot market, unilateral trading in the futures market, or the spot has been sold and the futures position has not been closed. The harm of false hedging transaction is enormous, which may not only cause huge losses of enterprise assets, but also adversely affect the functional application of futures market. Disclaimer: This article only represents the author's personal views and has nothing to do with Phoenix. Its originality and the words and contents described in this article have not been confirmed by this website, and this website does not make any guarantee or commitment to the authenticity, completeness and timeliness of this article and all or part of its contents and words. Readers are invited for reference only, please check the relevant contents yourself.