Hedge funds are rare in China because of their complex hedging strategies and the lack of relevant systems, but they are common abroad, such as Soros Quantum Fund, Robertson Tiger Fund and bridgewater, which are all internationally renowned hedge funds.
Hedge fund trading model
1, stock index futures
Hedging of stock index futures refers to the behavior of taking advantage of the unreasonable price of stock index futures market, participating in the trading of stock index futures and stock spot market at the same time, or trading stock index contracts with different maturities and different (but similar) categories at the same time to earn the difference.
Arbitrage of stock index futures can be divided into cash hedging, intertemporal hedging, cross-market hedging and cross-variety hedging.
2. Commodity futures
Commodity futures also have hedging strategies. When buying or selling a futures contract, sell or buy another related contract and close both contracts at a certain time.
Hedging refers to buying (or selling) physical objects in the spot market and selling (or buying) futures contracts in the futures market; Arbitrage only buys and sells contracts in the futures market, and does not involve spot trading.
Hedging 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.
In the market economy, there are many kinds of transactions that can be hedged, such as foreign exchange hedging and option hedging, but futures trading is the most suitable one.
First of all, because the futures trading adopts the margin system, the transaction of the same size only needs to invest less money, so the cost of doing two transactions at the same time has not increased much.
Secondly, futures can be sold short, and virtual hedging of contract liquidation and real hedging of physical delivery can be done. The conditions for completing the transaction are flexible, so the hedging transaction developed rapidly after the birth of futures, a financial derivative.