The latter tends to take risks, but also requires higher returns.
These two aspects complement each other and form a complete futures trading process. Among them, hedging is a hedging transaction in which futures contracts unique to the futures market temporarily replace spot transactions and hold trading positions of the same variety but in the opposite direction in the futures market.
Through this trading method, we can compensate each other with the profits and losses of the two markets, and finally avoid the possible losses caused by price fluctuations. Speculation, on the other hand, makes use of the characteristics that futures trading can buy and sell all futures contracts without enough trading margin, and do larger business with less investment. This provides investors with conditions and opportunities for speculative profits.
"Small and wide" is the motivation of speculators to conduct futures trading. In this process, speculators may suffer economic losses because of misjudgment, or they may gain huge profits because of successful trading. The complementary relationship between hedging and speculation constitutes a complete futures trading system.