A very important point of contract hedging is the word "hedging". If you know what hedging is, you will know what contract hedging is. Hedging, in the industry, refers to the intention of investors to invest in reverse to reduce the investment risk of the other party. This concept actually belongs to the financial field. Generally speaking, investors will conduct two transactions with opposite prices, opposite quantities and opposite directions, and at the same time protect their capital, so as to reduce investment risks and stabilize their income.

To put it simply, contract hedging is to do more while shorting, in order to achieve the lowest income after the transaction, forming a situation of no profit or loss. It sounds simple, but in fact, only experts can do contract hedging, and only experts dare to do it. Novices who are not familiar with the market can easily lose more than they gain. Don't be a novice. Only experts with sufficient market acumen dare to try hedging contracts.

Hedging contract refers to the closing of an open position in the futures or foreign exchange market.

In the futures or foreign exchange market, the closing transaction that occurs at the same time of buying and selling open positions is called hedging closing.

For example, customer A bought 1009 contract of100 lots of open soybean in the futures market on the last trading day of 2009; Customer B sold 109 open soybean contracts on the first trading day of 20 10. The next day, in the futures market, customer A sold and closed the soybean 100 contract, and customer B closed the soybean 100 contract.

The closing transaction of warehouse receipts between Party A and Party B is called hedging contract.