1. Hedging, commonly known as "Qin Hai", also known as hedging transaction, means that traders sell (or buy) the same number of futures trading contracts in the futures exchange as hedging. It is an act of temporarily replacing physical transactions with futures transactions in order to avoid or reduce the losses caused by unfavorable price changes.

2. The basic characteristics of hedging: at a certain point in time, buying and selling the same commodity in the spot market and the futures market with the same quantity but in the opposite direction, that is, selling or buying the same quantity of futures in the futures market while buying or selling the real thing. After a period of time, when the price changes make the spot trading profit or loss, the profit or loss of futures trading can be offset or compensated. Therefore, hedging mechanisms are established between "now" and "period" and between short-term and long-term to minimize price risk.