Glossary - ChicksX

Derivatives are financial contracts whose value is based on underlying assets like cryptocurrencies, stocks, or commodities.

Derivatives are financial instruments deriving their value from an underlying asset, such as cryptocurrencies, stocks, or commodities. They are used for hedging risk, speculation, or gaining access to additional assets or markets. Common types of derivatives include futures contracts, options, and swaps. In a crypto/fiat exchange context, derivatives allow traders to bet on the price movement of cryptocurrencies without owning the actual asset. This can amplify potential gains but also increases risk. Understanding derivatives is crucial for managing risk and leveraging opportunities in both traditional and digital financial markets.