In order to reduce and avoid risks and achieve the purpose of hedging, modern financial derivatives were created.
(Unknown, 2012） Specific foreign exchange derivatives, and related concepts include: Margin trading which meant traders could pay a small deposit but make full transaction without the practically transferring of your principal.
At the same time, the buyers need not present full payment only when the physical delivery gets performed on the maturity date.
(Ma Qianli, 2011) Foreign exchange derivatives can allow investors to engage in risk avoidance to keep value, but also can earn profit through speculation.
(Chen Qi, 2009) In addition speculative transactions in the financial market are considered negatively and potentially damaging to the real economy.