What are Forex Derivatives?


Foreign exchange derivatives, or FX derivatives for short, is a product that allows you to trade on live market price movements without actually owning the underlying instrument on which your contract is based. FX derivatives trading focuses only on the direction in which the price of an asset moves, and is not concerned at all with the margin of movement. This makes trading FXD easy to pick up and a valuable financial instrument in the pocket of any trader.

Benefits of Trading FX Derivatives

Controlled Risk

FX derivatives provide a predefined profit and risk structure. Even before the trade contract is executed, you will be able to accurately analyze beforehand the potential risks and profits, alongside other trade parameters.

High Potential Profits

On top having one of the highest return-on-investment percentages in the market, FX derivatives trading provides you with an opportunity to open multiple trade positions with your underlying assets. In doing so, it allows you to return sizable profits with every trade.

Simple Trading Process

With FX derivatives, you will find that trading FX derivatives far simpler than its conventional counterpart. Traders only need to focus on determining whether or not the price change will go up or down, without predicting the magnitude and margins of the movements, in the timeframe you have chosen. A simple call or put option based on which direction you think your underlying asset will move is all it takes to earn substantial profits.