What is the so-called hedge realized value? All kinds of liquidation have confused the little whites, but we still need to make a specific distinction, otherwise some problems may arise, so Bian Xiao sorted out what is called hedging liquidation for everyone, hoping that everyone will like it.

What is hedging liquidation?

Hedging liquidation refers to ending the investment through a transaction with the same amount in the opposite direction as when the position was opened. In futures trading, liquidation methods are divided into hedging liquidation and performance liquidation. Because the exchange has regulations on investors' delivery qualifications, and most investors are unable to perform their duties, most investors end their investment by hedging their positions.

Classification of liquidation

Closing positions can be divided into hedging closing positions and forced closing positions. Hedging refers to the settlement of previously bought (sold) contracts by selling (buying) futures contracts in the same delivery month. Closing a position refers to the behavior of futures traders to buy or sell futures contracts with the same variety, quantity and delivery month but in the opposite direction, and close futures trading. The futures market is a two-way trading system. In a complete futures transaction, there are usually the following liquidation methods: first, buy-open the position first, then sell-close the position; Second, sell-open the position first, then buy-close the position; Third, purchase, pay the full deposit after the expiration to participate in the delivery and receipt; Fourth, sell and submit standard warehouse receipt (cargo certificate) to participate in delivery and collection after maturity. Among the above four methods, the first and second methods belong to "hedge liquidation".

Profit and loss calculation hedge liquidation is the liquidation method of most contracts. When hedging and closing positions in futures trading, the calculation formula of profit and loss is: buyer's (long) profit and loss = (closing selling price-contract buying price) × contract quantity× contract unit seller (short position) = (closing selling price-closing buying price )× contract quantity× contract unit.

What does hedging mean?

Hedging and closing buy contracts. The futures market is a two-way trading system. In a complete futures trading, there are only the following ways to close the position:

First, buy-open positions first, and then sell-close positions;

Second, sell-open the position first, then buy-close the position;

Third, purchase, pay enough deposit after maturity to participate in delivery and receipt;

Fourth, sell and submit standard warehouse receipt (cargo certificate) to participate in delivery and collection after maturity.

Among the above four methods, the first and second methods belong to "hedge liquidation".