(1) foreign exchange hedging. The hedging function of forward foreign exchange market is the most important function of forward foreign exchange market. To achieve this function, we can reduce or eliminate the risk in the future spot market by adopting forex futures trading in the opposite direction to the spot position. There are two ways of hedging, namely short hedging and long hedging. ② foreign exchange speculation. Foreign exchange futures speculation is another important function of the forward foreign exchange market. Foreign exchange futures speculation is an act of buying and selling foreign exchange futures contracts, profiting from the price changes of foreign exchange futures and taking risks at the same time. The basic principle of speculative trading is that speculators buy or sell a certain number of foreign exchange contracts according to the forecast of the price trend of foreign exchange futures. If the price trend is as predicted, they can smoothly close their positions at a certain price, and the bid-ask difference of the contract is profit; If the price is contrary to the forecast, speculation will take risks, and the bid-ask difference is a loss.

Foreign exchange futures speculation can be divided into two types: short-term speculation and long-term speculation. The so-called short selling means that speculators predict that the price of foreign exchange futures will fall, so as to sell (open positions) first and then buy (close positions), sell at a high price and buy at a low price, thus achieving the purpose of making profits. Doing more speculation means that speculators predict the rise of foreign exchange futures prices, buy first and then sell, buy at a low price and sell at a high price, thus making a profit.