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<h1>Hedging transactions protect traders against price fluctuations through counter-contracts with equal quantities and delivery requirements</h1> Hedging transactions are financial arrangements where traders, exporters, and manufacturers protect themselves against market price fluctuations through counter-contracts. The definition encompasses transactions involving equal quantities of products or materials to offset potential losses. For traders, valid hedging contracts require that sales transactions not exceed total stock on hand, while purchase contracts must correspond to existing forward sale agreements with actual delivery. These protective arrangements can involve the same commodity or connected commodities, such as different cotton varieties, providing flexibility in risk management strategies.