Below is a glossary of terms that are used in the online trading industry. Select the first letter of the word you are seeking from the list above to jump to the appropriate section of the glossary.
A financial instrument or security whose value is derived from and is dependent on the value of another underlying asset or financial instrument (such as an exchange rate, commodity, stock, index, bond or mortgage contract). The main use of derivatives is to lower risk for one party while offering a potentially high return at a higher risk to another party. There are four main types of derivatives contracts: forwards, options, futures and swaps.