Mainly some enterprises lock in production profits in the futures market. The act of making physical delivery. Generally carried out by spot enterprises. Everyone is speculating.

There are two kinds of hedging, which are divided into long-term hedging and short-term hedging. Long-term hedging refers to holding short positions in the spot, bullish on the market, choosing to buy and establishing long futures positions. Short-term hedging refers to holding spot bulls, bearish on the market, choosing to sell and establishing futures shorts! So generally, in a rising market, you will choose to buy a hedge.

The purpose of hedging is to avoid risks.

Premise: you hold the scene.

Possible rising market: the spot value may rise, and you earn it; When you sell a contract in the futures market, you lose money, but in the end, you don't lose money, and your goal is achieved.

In case of misjudgment

Downward market: the spot depreciates, and the futures contracts sold are profitable because of the decline. The end result: no loss, no gain, and the risk is locked.