Hedge (in English) refers to foreign firms, import and export traders engaged in international commodity trading, and people engaged in international investment. If they expect to receive and pay a certain amount of foreign exchange in the future, they can use forward foreign exchange transactions to avoid risks in order to avoid losses caused by changes. This hedging operation is called forward hedging or forward hedging. This is a way to reduce business risks while still making profits from investment. General hedging is to conduct two transactions at the same time, both related to the market, in the opposite direction, with the same amount and breakeven. 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. 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 is the most common in the foreign exchange market, focusing on avoiding the risk of one-way trading. The so-called single-line trading means buying short positions (or short positions) when you are optimistic about a certain currency, and selling short positions (short positions) when you are bearish on a certain currency. If the judgment is correct, the profit will naturally be more; But if the judgment is wrong, the loss will be very large.

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