Market Terms

We don't know everything about the markets.  We're just devoted to learners.  Taken from those smarter than ourselves, here's how we define Derivatives.

A security that derives its value from an underlying asset or benchmark.  Derivatives have many uses in trading, such as hedging a position, speculating on the future movement of an asset, or even to give leverage to a holding.  The value of a derivative is dependent on the fluctuations of the underlying asset itself.  Most, however, are not traded directly on an exchange. They’re used by institutions to hedge risk or make speculations on the underlying asset’s future price changes.  Some of the more common derivatives are futures contracts, options, forwards, and swaps.