Hedging transaction is to close the original buying (or selling) contract by selling (or buying) the foreign exchange futures contract in the same delivery month before the expiration of the foreign exchange futures contract, that is, the short seller of the foreign exchange futures contract buys from the long seller or the long seller sells to the short seller. These two transactions must be market-related, in opposite directions, in 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. Sometimes hedging is also called hedging.

Hedging trading is a futures contract that replaces spot trading with foreign currency futures contracts and buys (or sells) the same commodity in the futures market in the opposite direction to the spot market. No matter how the spot supply market price fluctuates, it can eventually achieve the result of losing money in one market and making profits in another market, and the amount of loss is roughly equal to the amount of profit, thus achieving the purpose of avoiding risks. This definition is based on the risk of a trader's foreign currency assets due to actual or expected price changes. It can also be seen from this definition that there are two kinds of hedging transactions: one is to hedge the existing spot position; The second is to hedge the recent spot position.