Funds that use hedging trading methods are called hedge funds, also known as hedge funds or hedging funds.

Refers to financial funds that combine financial derivatives such as financial futures and financial options with financial instruments for the purpose of profit.

It is a form of investment fund, which means "risk-hedged fund".

The two most classic investment strategies of hedge funds are "short selling" and "leverage":

Short selling:

That is, buying stocks as a short-term investment means selling the stocks purchased in the short term and then buying them back when their stock prices fall to earn the price difference (arbitrage). Short-term investors almost always borrow other people's stocks to short-term their positions ("long position" refers to buying stocks themselves as long-term investments). A short position strategy is most effective in a bear market. If the stock market rises instead of falling, and short-term investors bet on the wrong direction of the stock market, they will have to spend a lot of money to buy back the appreciated stocks and suffer losses. The short-term strategy is not adopted by ordinary investors due to its high risk.

Leverage:

"Leverage" has multiple meanings in the financial world. The most basic meaning of the English word is "leverage". Usually it refers to It is to use credit means to expand its capital base. Credit is the lifeblood and fuel of finance. Entering Wall Street (the financing market) through "loan leverage" creates a "symbiosis" relationship with hedge funds. In high-stakes financial activities, "lending" has become an opportunity for Wall Street to provide chips to big players. Hedge funds borrow capital from big banks, and Wall Street provides services such as buying and selling bonds and back offices. In other words, hedge funds armed with bank loans in turn threw large amounts of money back to Wall Street in the form of commissions.