If the spot and futures prices fall at the end of the period, then the spot losses, futures empty orders make money, and futures profits make up for the spot losses and complete the hedging effect.
If the spot and futures prices rise at the end of the period, then the spot will make money and the futures will lose money. Although hedging reduces your profit in the spot market, this situation is also a successful hedging.
future
The English name is Futures, which is completely different from the spot. Spot is actually a tradable commodity (commodity), and futures are mainly not commodities, but standardized tradable contracts with certain mass products such as cotton, soybeans, oil and financial assets such as stocks and bonds as the target. Therefore, the subject matter can be commodities (such as gold, crude oil and agricultural products) or financial instruments.
The delivery date of futures can be one week later, one month later, three months later or even one year later.
A contract or agreement to buy or sell futures is called a futures contract. The place where futures are bought and sold is called the futures market. Investors can invest or speculate in futures.