Hedge fund is one of the categories of fund management, not financial derivatives. They raise funds through private placement, and then charge subscription fee, redemption fee and profit commission. In operation, we usually use leverage to enlarge the multiple of funds, look at many high-quality stocks and bearish junk stocks at the same time, and allocate funds scientifically. During the bear market, its high-quality stocks fell less, and the bearish junk stocks fell more, and then it was profitable after hedging the losses of multiple stocks. During the bull market, bullish high-quality stocks rose greatly, while bearish junk stocks rose slightly, so they were profitable after offsetting the losses of short stocks.

Of course, there are many means and tools of hedging, so hedging is also divided into many factions.