Are you looking for new financial instruments and you are tired of classic instruments? One option you could explore is to invest in exotic financial instruments.
To manage your investments properly, it is important to have a strategy to protect yourself from sudden, or unexpected, movements in the financial markets. The simplest method that you can use in order to try to significantly reduce the risk of losses is to diversify your investment portfolio.
For those looking for new financial instruments, alternatives to the classic ones, a possible option is to invest in exotic financial instruments. A exotic derivative, in finance, is a more complex derivative of the commonly traded "vanilla" products.
These instruments make use of financial leverage, which makes it possible to use a reduced capital to obtain the same exposure as the corresponding “vanilla” instrument. It is important to remember that financial derivatives are complex instruments and involve the risk of losing your capital every time you trade on them, as, just as the potential gains are amplified, so too are the losses . In this article we will analyze some of the best known and most popular exotic tools.
CFDs on virtual currencies
AVALANCHE - is a virtual currency platform launched in 2020 based on blockchain technology capable of providing near instantaneous transaction purposes. It is used to pay transaction processing fees and secure the network. It can process 4,500 transactions per second.
KUSAMA - is a pre-production public environment for Polkadot (platform and virtual currency), which allows any developer to experiment and test new blockchains or applications, with real virtual currencies being traded on an open market before they are released.
MOONBEAM - is a parachain that promises cross interoperability between the Ethereum and Polkadot blockchains. More specifically, Moonbeam is a smart contract platform that allows developers to move dApp (software applications running on a distributed network) between the two networks without having to rewrite code or redeploy the infrastructure.
POLYGON - is a virtual currency and platform that allows blockchain networks to connect and expand. It works using the Ethereum blockchain and connects projects based on the same virtual currency.
SOLANA - is a decentralized IT platform that uses the SOL currency for payments. Solana aims to improve the scalability of the blockchain and claims to be able to support 50,000 transactions per second without altering its decentralized character.
Commodity CFDs
SOY - Soybeans and palm oil are considered "substitutable commodities" because food processors often choose between the two ingredients due to constantly fluctuating prices. In theory, this combination should limit the variability of the spread between the two markets, but this is not always the case.
Live Cattle and Feeder Cattle futures serve commodity producers and users who pursue businesses with a more sophisticated level of risk management and hedging instruments or those seeking to capitalize on the extraordinary opportunities offered by these markets.
LEANHOGS - Represents a type of pork futures contract that can be used to trade and speculate on pork prices. Commodity markets are relatively highly regulated and most commodities are regulated by standard trading limits. Trading the LEANHOGS instrument involves rules that apply in most markets. An example would be limiting price volatility by placing a limit on how much they can fluctuate during a given trading day.
Index CFD
VSTOXX - It is designed to reflect investor sentiment and general economic uncertainty by measuring the implied 30 day volatility of the EURO STOXX 50 index. It offers the most accurate and cost-effective way to access European volatility. There are no transaction costs in handling derivatives VSTOXX. They are exchange traded and centrally cleared, providing independent market valuation and solid liquidity.
VIX - The VIX Index is known as Volatility Index and was created by the Chicago Board Options Exchange (CBOE). Widely known as proxy for the entire US stock market, its benchmark is just the S&P 500 index (available for trading on the xStation platform as US500 ).
You can trade any of the above instruments, as well as classic instruments (over 5500 equity and ETF classic instruments with participation, as well as CFD based on indices, commodities, stocks, pairs of currencies, virtual currencies, etc.) through the online platform XTB.
Always remember to consider the risks
It is important to remember that exotic instruments are complex, and any opinion, research, analysis, pricing or other information provided under the title of general market commentary does not constitute investment advice. Please also note that information or research based on historical data does not guarantee future performance or results.
It is important to remember that exotic instruments are complex, and any opinion, research, analysis, pricing or other information provided under the title of general market commentary does not constitute investment advice. Please also note that information or research based on historical data does not guarantee future performance or results.
Consider whether you understand how CFD works and whether you can afford to take this high risk of losing your money. CFD trading involves neither owning nor investing directly on the underlying instrument. The investment is solely made through the derivative instrument which replicates the prices of the underlying instruments and is subject to liquidation in cash.
Original article published on Money.it Italy 2022-10-26 10:30:00. Original title: Cosa sono gli strumenti finanziari esotici?
