Brief background of derivatives

Apart from serving as a multi-national regulated exchange for cryptocurrency assets, Bityard also offers a platform for derivatives trading. Trading derivatives has been a global phenomenon since the 1980s. It traces its roots to the trade of agricultural commodities such as corn, wheat, and tea. Derivatives trading began when producers of agricultural commodities agreed to sell their crops in advance before harvest at an agreed price with the buyer. Such a trade served as insurance against price volatility at the time of harvest. Basically, the spot exchange did not involve the movement of the actual commodity, but it was merely a representation of the particular commodity in question. With time, such a financial instrument has evolved to what it is today, making it possible for a platform like Bityard to enable traders to engage in the online trade of derivatives.

What is derivatives trading?

First things first, what is derivatives trading? In simple terms, a derivative is an asset whose value is derived from another asset or group of assets. Therefore, derivatives trading occurs when traders engage in the trade of derivatives. In derivatives trading, buyers and sellers speculate on the price movements of an asset and make profits based on the price fluctuations of the asset, rather than the exchange of the asset itself. For example, derivatives can be derived from underlying assets such as commodities, stocks, currencies, or indices. Traders will then speculate on the future price of the underlying asset (e.g. stock) without having to buy the actual stock itself. This simply means that a derivative is actually a contract.

Derivatives trading on Bityard

If you are not a stranger to the Bityard platform, you definitely know that Bityard is a cryptocurrency trading platform. However, Bityard is more than just a crypto exchange, it also allows for the trade of derivatives. Traders on Bityard can take a long or short position if they anticipate the price of the derivative will rise or fall respectively, thereby taking advantage of market movements in both directions. Derivatives trading on Bityard can be done with leverage of up to 200X and the charges are calculated as a percentage of leverage and margin. The following classes of assets are available to trade as derivatives on Bityard.

1. Commodities

This category represents the following natural resource commodities: Crude Oil, Copper, Gold, Silver and Natural Gas. A trader can buy and sell these commodities without having to exchange the actual oil, gold, silver or natural gas. These assets simply enable the trader to profit from the price movements of these commodities on the global market.

2. Indices

The following stock indices can also be traded on Bityard: Mini Dow, Nasdaq 100, China A50, Hang Seng, DAX and Nikkei225.

Advantages of derivatives trading on Bityard

Generally, derivatives trading presents a host of advantages that may accrue to a crypto trader. A trader can use derivatives to hedge a position, profit from the price volatility of an asset, or add leverage to held assets. It is also advantageous that the trader only trades in the monetary value of the asset, and not in the tangible asset itself. You do not need to own a barrel of oil in order to trade it. Bityard offers the following advantages:

• Bityard offers leverage on derivatives trading up to a margin of 200X. This amount of leverage is enough to magnify a trader’s position significantly, exposing them to a great potential for profits. However, traders must be aware that great exposure in the market can increase the potential for losses.
• The charges on each trade are only a small percentage of the amount being traded (0.025%). This is relatively cheaper than most platforms who charge anywhere between 3% – 10%.
• Derivatives on Bityard are a great way for traders to diversify their crypto portfolios. Traders can add derivatives trading to their trading strategy as a way of casting their net wider.

This article also appears on techbullion.com