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Foreign exchange investment terminology hedging transactions

What forexrebateclub forex rebate club transaction? Hedg cashbackforexbrokerg refers to buying (or selling) futures contracts of the same commodity in the futures market in the opposite direction cashbackforexexness in equal quantities as those traded in the spot market, so that no matter how the cashback forex of the spot supply market fluctuates, the result of a loss in one market and a profit in another market can eventually be achieved, and the amount of loss and profit will be approximately equal, thus achieving the purpose of risk avoidance  The basic function of the futures market is the hedging of price risk. One of the basic economic functions of the futures market is price risk hedging, hedging is the most common means to achieve this function hedging is to hedge the spot price risk for the purpose of futures trading behavior, the basic practice is the trader at the same time in the spot and futures markets to trade in the opposite direction, in the two markets to establish a hedging mechanism, so that the profit and loss of the two markets complement each other, to achieve the purpose of hedging the risk of price fluctuations in the spot market  Hedging considerations: External - the macroeconomic premise of the world economy determines the price trends in the futures market and the supply and demand and price levels in the spot market Internal - the basis for hedging is the spot market. Vertical - the linkage between industries, the direction of price transmission between upstream and downstream industries, the time lag, etc. Horizontal - the ultimate goal of the spot trader undertaking hedging is to achieve the expected return in the spot market, therefore (1) Qualitative determination of whether to buy or sell hedging, which is done by different nature of spot traders according to their production and operation needs Copper consumers, such as cable plants, usually buy hedging to lock in the raw material cost of cables, while copper producers, such as smelters, use sell hedging to ensure the production and operation of cables. Of course, the possibility of actual operation such as cable plant selling hedging cannot be ruled out. (2) The amount of hedging implemented is based on the amount of raw materials required or planned output to buy or sell the corresponding number of contracts in the futures market, and the amount of hedging can be done at once or in batches; the price of hedging is determined by combining the planned production cost, expected sales price and futures price, such as cable plant The upper limit of the raw material copper cost that can be accepted by the cable factory is C0, and the price below C0 is the range that the factory is willing to accept for buying and selling the futures; the guaranteed contract is usually related to the production progress, usually March and forward contracts; the point of guarantee is determined by the futures price and the production time (3) Unwind and unwind the guaranteed value must also be in accordance with the production process in the cable factory to purchase raw material copper, and the smelter signs the sales contract of finished products at the same time in the futures market (4) Hedging contracts face greater price risk than the spot, and can be avoided by reducing the weight or moving positions to avoid the risk of falling prices, buying hedging can be appropriate to reduce the position, or adjust the forward contract to the near future. When the price rises, the sale of hedging can be carried out similar operations In addition, hedging is not rigidly bound, as long as the operation is appropriate can also be successfully hedged at the same time to obtain considerable additional profits under the premise of a better grasp of the price trend in the futures market, you can moderately increase the amount of hedging positions extended for speculative transactions buy hedging in the price as expected to rise, the position to increase the purchase can be profitable; if the price falls too much caused The futures market loss is too large, the futures to spot, delivery back to the spot; the same applies to the sale of hedging Finally, it should be noted that the theory of hedging is very simple, but in practice must face many practical variables, here can not be detailed, the spot business should provide detailed production and operation information to the brokerage company and maintain close contact to ensure a practical operation (Qin Yangmei) 

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