The Derivative World of Trading
Image by Sergei Tokmakov Terms.Law from Pixabay Since the day the market has started, lots of institutional investors makes predictions and does arbitrage to ensure the institution they work on gain more than what they lost. It isn’t uncommon that some of these investors does predict how things will fold before it happened, and it isn’t uncommon as well that their predictions are accurate. Now, I'm going to talk about the types of derivatives trading and the types of market participants. There are 3 types of derivatives trading: hedging, forecasting, and arbitrage trading. Market participants participating in each type of trading are called hedgers, forecasters, and arbitrage traders. To help you understand, we will explain the futures trading among derivatives. Futures trading refers to entering into a contract to purchase goods needed at a specific time in the future at a price at present time, rather than directly purchasing the it...