The second of a 2 part write-up … Before I discussion of using hedging to offset danger, we need to comprehend the role and the purpose of hedging. The background of modern-day futures trading begins in Chicago in the early 1800s. Chicago is located at the base of the Wonderful Lakes, near the farmlands and livestock nation of the United state Midwest making it a natural center for the transport, distribution, and also trading of farming produce. Excess as well as scarcities of these products created disorderly fluctuations in the rate.