Futures hedging refers to the trading activities in which the futures market is used as a place to transfer price risks, and futures contracts are used as temporary substitutes for buying and selling commodities in the spot market in the future to insure the prices of commodities to be bought in the future.

Futures hedging can be divided into long hedging and short hedging.

1. long hedging: a futures trading method in which traders buy futures in the futures market first to avoid causing economic losses to themselves when buying in the spot market in the future. Therefore, it is also called "long hedging" or "short hedging".

2. Short hedging: also known as selling hedging, refers to a futures trading method in which traders sell futures in the futures market first, and when the spot price falls, the profit in the futures market makes up for the loss in the spot market, thus realizing the value preservation.

Short hedging is a trading method to sell contracts equivalent to the spot quantity in the futures market in order to prevent the risk of spot price falling during delivery. Hold short positions to hedge the spot that traders will sell in the spot market. Therefore, selling hedging is also called "short selling hedging" or "selling hedging".

Extended data

Explanation of common futures terms:

1. futures: the trading form of standardized contracts in futures exchanges.

2. Close the position: buy and sell, or buy and settle the original new order after selling. ?

3. Divide positions: Exchange members or customers borrow the seats of other members or customers to engage in futures trading in the exchange, so as to influence prices and manipulate the market, thus circumventing the position limit of the exchange, and their total positions in each seat exceed the position limit of the exchange for this customer or member. ?

4. Moving positions (dumping positions): Exchange members move positions from one seat to another in order to create market illusion or transfer profits. ?

5. Performance: the action taken when the call option holder wants to buy the relevant futures contract or when the put option holder wants to sell the relevant futures contract.

6. Gap: the price difference of the grade and grade of the same commodity in different delivery places. ?

7. Position: the number of trading contracts held in the transaction. ?

8. Long position: bullish buying.

9. Short selling: bearish selling.

10, shadow candle: the opening price per unit time is higher than the closing price. ?

1 1, candle: closing price per unit time is higher than opening price. ?

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