According to the goal of hedging, first buy relevant appropriate futures in the futures market; Then buy the spot in the spot market and sell the same futures contract in the futures market, thus completing the hedging business.
Specifically, traders don't intend to buy a physical commodity with the right price, but to ensure that the price of the physical commodity can still be maintained at a certain level in the future, so buying hedging can be applied.
2. Selling hedging: also known as short hedging, it is to sell futures in the futures market and use short positions in the futures market to ensure long positions in the spot market to avoid the risk of falling prices.
According to the goal of hedging, first sell the relevant appropriate futures contracts in the futures market. Then sell the spot in the spot market, buy the same futures contract in the futures market, hedge in the futures market, and end the actual hedging transaction.
Specifically, in order to keep the price of the actual goods sold in the spot market in the future at the level that suits them at present, traders should adopt the way of selling hedging to protect the income from selling the physical goods in the future.