Hedge funds use various trading methods (such as short selling, leverage, program trading, swap trading, arbitrage trading, derivatives, etc. ) to hedge, transpose, hedge, and make huge profits. These concepts have gone beyond the traditional operation scope of preventing risks and ensuring benefits. In addition, the legal threshold for launching and establishing hedge funds is much lower than that of mutual funds, which further increases their risks. In order to protect investors, the securities management agencies in North America classify it as a high-risk investment category, and strictly restrict the participation of ordinary investors. For example, it is stipulated that each hedge fund should have less than 100 investors and the minimum investment is $6,543,800+0 million. Another example is: hedgie, for example, in a most basic hedging operation. After the fund manager bought a stock, he also bought a put option with a certain price and time limit. The utility of put option is that when the stock price falls below the option-limited price, the holder of seller option can sell his stock at the option-limited price, thus hedging the risk of stock decline. For another example, in another hedging operation, the fund manager first chooses a bullish industry, buys a few good stocks in this industry, and sells a few bad stocks in this industry according to a certain proportion. The result of this combination is that if the industry is expected to perform well, the increase of high-quality stocks will definitely exceed other inferior stocks in the same industry, and the gains from buying high-quality stocks will be greater than the losses from shorting inferior stocks; If the expectation is wrong, the stocks in this industry will fall instead of rising, then the decline of inferior stocks will be greater than that of high-quality stocks, and the profit of short selling will be higher than the loss caused by the decline of buying high-quality stocks. Because of this mode of operation, the early hedge fund can be said to be a form of fund management based on the conservative investment strategy of hedging. After decades of evolution, hedge funds have lost the original connotation of risk hedging, and the title of hedge funds also exists in name only. Hedge fund has become synonymous with a new investment model, that is, based on the latest investment theory and extremely complex financial market operation skills, making full use of the leverage of various financial derivatives, taking high risks and pursuing high returns.