What is difference between equity and derivatives?
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Difference between equity and derivatives
What is difference between equity and derivatives?
Equity is financial term which is referred to as a financial tool to invite investors to invest funds in a company and share the owner ship of the company to the amount of investment they have made.
Derivative: A derivative is a financial contract between two parties which derives its value from an underlying asset.
From the trading prospective none - you trade it just as stocks.
From analysis prospective - with stocks you analyze stocks (technical and or fundamental analysis) and with ETFs you analyze instrument they track. Such, with SPY you analyze S&P 500 index (mostly you use technical analysis as fundamentals are done by Standard & Poors) and with GLD you analyze gold and etc.
From Risk prospective - ETFs are considered to be less risky, yet you can trade leveraged ETFs where risk is higher.
