Derivatives

From Forexpedia

Derivatives are financial instruments that acquires the majority of their value from the price of the underlying asset they are tracking such as commodities and currencies, or from securities such as stocks and bonds.

Swaps, futures, forwards, and options are the most common derivatives. Investors trade them on exchange or over-the-counter usually as an alternative to speculating in the underlying asset, or to hedge their risk on a position in the underlying asset.