In the world of finance, derivatives are indispensable for private and institutional investors. They can be used in very different ways for speculation or hedging. In this article, you will find out exactly what financial derivatives are, how they are classified, which assets are traded and the advantages and disadvantages of derivatives trading.<\/p>\n\n\n\n
The Latin word \"derivare\" means \"to derive\". Accordingly, financial derivatives are Derivative financial instruments<\/strong>. These are based on existing securities or loans. Derivatives can create further opportunities for trading or speculation.<\/p>\n\n\n\n This is a special form of investment that is derived from other financial investments and has a complex structure. The value of the corresponding derivative depends on the underlying asset. The term Underlying<\/strong> refers to the underlying financial instrument.<\/p>\n\n\n\n The underlying assets can be, for example Foreign exchange, Stocks<\/a>raw materials, Indexes<\/a> or Cryptocurrencies<\/a><\/strong> be. Derivatives can be seen as a type of financial bet. Traders bet on the development of the underlying asset in the future.<\/p>\n\n\n\n In practice, derivatives are mostly used for Very short-term transactions<\/strong> used. Trading in derivatives is also important for speculators and private traders. In addition to the possibility of Speculation<\/strong> Derivatives can also be used to Fuse <\/strong>can be used:<\/p>\n\n\n\n Leverage products<\/strong> are a special type of derivative. These are securities whose price tracks that of the underlying asset disproportionately. This can lead to a so-called leverage effect and thus to disproportionately high profits or losses.<\/p>\n\n\n\n In principle, derivatives can be divided into unconditional and conditional derivatives. Unconditional derivatives<\/strong> contain an obligation to buy and sell the underlying asset. Both parties therefore enter into an obligation to buy or sell a fixed quantity of the underlying asset at a future date. <\/p>\n\n\n\n With contingent derivatives<\/strong> the buyer acquires the right to buy or sell an underlying asset. With this form, only one party is under an obligation. Conditional derivatives include options, for example. <\/p>\n\n\n\n There is no complete list of possible financial derivatives. Mostly certificates, CFDs, Futures<\/a>swaps, Options<\/a> and interest rate futures. In the following, we take a closer look at examples to make them easier to understand.<\/p>\n\n\n\n Trading in derivatives is particularly popular in the area of CFDs<\/strong>. This allows traders to speculate on the fall or rise of financial instruments such as shares or indices. CFDs exactly replicate their underlying asset. <\/p>\n\n\n\n Another option is offered by Options<\/strong>. These have a complex structure and are the most widespread financial derivatives. There are standardized contracts that give the buyer the right to buy or sell a specific underlying asset at a predetermined price at a fixed time. The buyer has the right, but not the obligation, to do so.<\/p>\n\n\n\n Futures <\/strong>are used when trading financial derivatives. Futures also contain standardized contracts. They enable traders to buy or sell shares or commodities at a fixed price. <\/p>\n\n\n\n At Swaps <\/strong>This results in various cash flows over a certain period of time. These are not exchange-traded instruments. Instead, these contacts take place over the counter between two traders.<\/p>\n\n\n\n In summary, derivatives are Derivative financial instruments<\/strong>based on another asset. These can be commodities, indices or shares, for example. The term underlying asset is used for these financial instruments on which a derivative is based.<\/p>\n\n\n\n In principle, derivatives serve to Hedging or speculation<\/strong>. Institutional investors use derivatives for \"hedging\" in order to minimize fluctuations in the underlying asset. The possibility of so-called leverage products makes derivatives very popular with speculators.<\/p>\n\n\n\n Derivatives have the advantage that the leverage effect provides opportunities for Disproportionately high profits<\/strong> arise. They also offer a high Flexibility<\/strong>access to different markets <\/strong>and can be used as Fuse <\/strong>can be used.<\/p>\n\n\n\n However, the leverage effect can also be high losses <\/strong>go hand in hand. Derivatives are also complex <\/strong>and partly have a Limited transparency<\/strong>as the performance is linked to the underlying asset and depends on many factors.<\/p>","protected":false},"author":20,"featured_media":0,"template":"","class_list":["post-56041","glossar","type-glossar","status-publish","hentry"],"acf":{"blog_summary":"","blog_faq_schalter":"nein","faq_uberschrift":"","blog_faq_loop":null},"_links":{"self":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/glossar\/56041","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/glossar"}],"about":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/types\/glossar"}],"author":[{"embeddable":true,"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/users\/20"}],"wp:attachment":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/media?parent=56041"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
Derivatives trading explained: How are derivatives categorized?<\/h2>\n\n\n\n
With which assets is derivatives trading possible?<\/h2>\n\n\n\n
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Financial derivatives have these advantages and disadvantages<\/h2>\n\n\n\n
Advantages<\/strong><\/td> Disadvantages<\/strong><\/td><\/tr> Leverage offers the chance of disproportionately high profits<\/td> High risk due to disproportionately high losses<\/td><\/tr> High flexibility due to the variety of options in derivatives trading (investment strategies and tradable assets)<\/td> High complexity due to versatility, which can lead to misjudgments and losses<\/td><\/tr> Access to many different markets, such as equities, commodities and currencies<\/td> Transparency may be limited in some cases, as the performance of derivatives depends on many factors relating to the underlying asset<\/td><\/tr> Enables trading and profiting with products that do not actually have to be held in the portfolio<\/td> <\/td><\/tr> Can be used for hedging, depending on the strategy<\/td> <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n Conclusion: Derivatives trading definition<\/h2>\n\n\n\n