1. Principle of identical or similar varieties: During the hedging operation, investors need to keep the hedged spot varieties consistent with or as similar as possible to their futures products.

2. Same month or near month principle: investors need to choose spot varieties that are close to the maturity date of futures contracts for hedging, and make the trend of the two in the market as consistent as possible.

3, the opposite principle.

4. The principle of equivalence.

Hedging:

Hedging is a stock market term, which refers to the offsetting financial operation taken by investors to prevent adverse price changes. Usually in the spot market and futures market, two groups of transactions in opposite directions are carried out.

That is, buying or selling commodity futures contracts with the same number of transactions in the spot market, but in the opposite direction, in order to sell or buy the same futures contracts at some time in the future for hedging and liquidation, and to liquidate the profits or losses caused by futures trading.

In order to compensate or offset the actual price risk or income brought by the price change in the spot market, the economic income of traders will be stabilized at a certain level.

Hedging refers to the offsetting financial operation taken by investors to prevent adverse price changes, and generally carries out opposite transactions in the spot and futures markets.

In order to control the exposure caused by foreign exchange risk, price risk and other specific risks, the Company sets financial instruments as hedging instruments to change their fair value or cash flow, and expects to carry out risk control activities to offset all hedged items or changes in fair value or cash flow.

Hedging takes the futures market as a place to transfer price risk, and relies on futures contracts as substitutes for commodities traded in the spot market in the future, so as to conduct insurance trading activities on the prices of commodities sold after buying now or those to be bought in the future.

Hedging should apply the principle of "equality and relative". Commodities traded in futures should be consistent with those traded in the spot market in terms of types or quantities, and spot transactions with relatively high risks should be selected for hedging.