Basis refers to the difference between the spot price of a specific commodity at a specific time and place and the futures price of that commodity in the futures market. Basis = spot price-futures price. Different reference objects have different basis difference results. Basis chart is a graph that records basis and its changing trajectory, and it is an important analysis chart in futures trading. Basis refers to the difference between the spot price of the hedged asset and the price of the futures contract used for hedging. Since both the futures price and the spot price will fluctuate, the basis will also fluctuate during the validity period of the futures contract. The uncertainty of basis is called basis risk. The key to reduce basis risk and realize hedging is to choose a highly matched hedging futures contract. When hedging a flat position, the basis risk is directly related to the basis. When investors hold short positions in spot and futures for hedging, the basis will be enlarged in hedging and flat position, and investors will make a profit. On the contrary, when an investor will buy an asset in the future and hold a long future positions for hedging, and the basis on the hedging settlement date will expand, the investor will lose money.