What Are Exchange Traded Derivatives?
The meaning of exchange traded derivatives:
A ‘derivative’ in finance terms simply means an instrument which helps identify and minimize investment risks and maximize returns. A derivative is a finance tool with no value on its own and it is simply a variable which gets its value from the value of the asset that it represents and which can be traded on a regulated exchange.
Features of exchange traded derivatives:
Finance and exchange traded derivatives occupy an important place in modern financial dealings. Exchange traded derivatives have become popular because they lessen the risks and improve the prospects of investors. Retail or individual investors prefer them as compared to the large firms.
The standardized contracts and complete transparency, which are important features of the exchange traded derivatives may not appeal to the large institutions which usually deal in a large variety of derivatives and these large firms may also be reluctant to disclose completely their trading methods and intentions to the public.
These derivatives value their assets based on the current market trends and are evaluated daily. The profit and loss calculation on such contracts is recorded on a day-to-day basis.
When people invest in a new and unlisted company in exchange for equities/ shares, it is known as equity crowdfunding. Monetary contributions of a large number of small investors make up equity crowdfunding.
Exchange traded derivatives, where the dealings are transparent and hedge risks are very helpful in restricting exposure. The over-the-counter derivatives help even new and small investors to minimize the risks of volatile market fluctuations.
The case of the FinCrowd App:
Sam Maxwell established the FinCrowd App as an equity crowdfunding platform. This is an automated app which provides its users an opportunity to earn returns on their investments, even if they have no experience in trading whatsoever.
The FinCrowd App allows anyone to sign up for free. The users need to choose an asset type or an investment portfolio in which they wish to invest money. The market specialists for that particular investment portfolio would invest the pooled-up money in lucrative ventures and the returns would be shared as per the equities owned by each individual.
The app is smartphone compatible and does not require any additional downloading. There have been mixed reviews about the FinCrowd App software being a legitimate equity crowdfunding platform and its reliability in hedging risks for the common individual investors.
The automated robot app, however, seems to have helped people in increasing their digital income, even when they do not possess prior investment knowledge. The application of exchange traded derivatives and crowd funding strategies seem to make it a decent win-win situation for all parties concerned.