What is Derivatives trading & how is it different from share margin financing?
Derivatives trading is the ability to trade various futures contracts listed on future exchanges & over-the-counter foreign exchange on a margin basis. That is, by nature of leveraging, you may trade contracts of a larger nominal value. The margin required in Derivatives trading is set to cover the price risk of the portfolio for a specified period. On the other hand, share investors usually leverage their investment by using equity portfolio as collateral for margin financing for the purchase of additional shares.
