Hedging is a risk management strategy to mitigate the impact of potential price changes. In the financial market, hedging is usually used to protect investors from fluctuations in commodity prices, interest rates, exchange rates and other risks. The trading principles of hedging can be summarized as follows:

1. Determine the source of risks: first, identify possible risks, such as commodity price fluctuations, interest rate fluctuations, exchange rate fluctuations, etc.

2. Choose the right hedging instrument: according to the risks faced, choose the right hedging instrument, such as futures, options and forward contracts.

3. Evaluate the hedging effect: Before implementing the hedging strategy, it is necessary to evaluate the hedging effect to ensure that the strategy can effectively reduce risks. This usually includes calculating the hedging ratio and comparing the net exposure risk.

4. Establish an appropriate hedging position: establish an appropriate hedging position according to the risk assessment results. The size of the hedging position should match the risk source to avoid over-hedging or under-hedging.

5. Monitoring and adjusting the hedging position: During the hedging period, regularly monitor the market changes and adjust the hedging position as needed. This helps to ensure that the hedging strategy is always effective.

6. Timely termination of hedging: After the hedging target is achieved, the hedging position is terminated in time to avoid unnecessary costs.

It should be noted that hedging can not completely eliminate risks, but can help investors reduce potential losses, thus improving the overall stability of the portfolio. It is very important to understand and follow these trading principles when using hedging strategies.