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Demystifying The World Of Derivatives

Demystifying The World Of Derivatives

We all know that the financial world is full of uncertainties and risks. To survive in an unpredictable market, investors need certain financial instruments to mitigate the risks that they are facing.

To mitigate this risk, modern finance has come up with a method called hedging. Derivatives are widely used to hedge against risks and uncertainties, although not limited to just hedging.

Derivatives have been increasingly gaining significance in the financial market. The popularity of derivatives has grown manifold since the year of 2000.

Here is an infographic for a quick overview of the derivative market and the difference between market makers and direct market access (DMA):

derivativee

What is a derivative?

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Margin, Leverage and You

Margin, Leverage and You

Trading (or investing) is not exactly a simple thing. Trading involves taking certain risks and using capital. For those who are cash-strapped or expect a higher absolute return, there is the option to borrow.

Borrowing capital for trading is known as margin trading or contract for differences (CFD). 

how-leverage-works

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