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What is the specific meaning of financial derivatives?
Financial derivatives are a special kind of financial products. The rate of return of this transaction comes from the performance of other financial factors. Such as assets (commodities, stocks or bonds), interest rates, exchange rates or various indexes (stock index, consumer price index, weather index). The performance of these elements will determine the return rate and return time of derivatives. The main types of derivative products are futures, options, warrants, forward contracts and interest rate swaps. These futures and option contracts can be traded in the market.

Investors who buy and sell such financial products need to be very cautious, because the losses may be greater than the initial investment of investors. At the same time, since it does not represent any assets, its transactions should not be regarded as investments.

The biggest difference between financial derivatives and stocks is that the stock market will expand. If it appreciates, everyone will benefit, but if it falls, no one will be spared (for example, the Wall Street stock market crash that led to the Great Depression in the United States 1929). Buying financial derivatives is a zero-sum game. Just like gambling, if someone makes money, someone must lose money.