Hedging refers to the trading activities in which the futures market is used as a place to transfer the price risk, and the futures contract is used as a temporary substitute for buying and selling commodities in the spot market in the future, so as to insure the prices of commodities to be bought in the future.

Basic characteristics of hedging:? The basic practice of hedging is to carry out the same commodity in the spot market and the futures market at the same time with the same quantity but in the opposite direction? Trading activities, that is, while buying or selling physical objects, selling or buying the same amount of futures in the futures market, after a period of time? When the price change causes the profit and loss of spot trading, the profit and loss of futures trading can offset or compensate each other. Therefore, hedging mechanisms are established between "now" and "period" and between short-term and long-term to minimize price risk.