Hedge "English" hedge "contains the meaning of hedging and hedging. Hedging transaction is simply a capital preservation transaction. Hedging transaction is to conduct two market-related transactions at the same time, in opposite directions, with the same amount, and break even.

Market correlation refers to the identity of market supply and demand that affects the prices of two commodities; If the relationship between supply and demand changes, it will affect the prices of two commodities at the same time, and the prices will change in the same direction.

The opposite direction means that the buying and selling directions of two transactions are opposite, so that no matter which direction the price changes, there is always a profit and a loss. Of course, in order to protect the capital, the number of two transactions must be determined according to the range of their respective price changes, so that the number is roughly the same.

Hedging can be used in stock market, but it is widely used in futures trading. This is related to the different rules of trading system in stock market and futures market.