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Derivatives are securities whose prices and price movements are based on the corresponding reactions of other securities. In contrast to shares, for example, derivatives are neither securities that represent shares in companies nor are they natural securities. Rather, they are artificially constructed securities that generally follow the price movements of the underlying asset disproportionately. Derivatives are used to hedge a portfolio against price losses or as speculative items in order to achieve the highest possible price gains. For example, a securities account can be secured by purchasing a put warrant (a warrant whose value increases when the price of the underlying asset falls) in addition to the actual stock. If, contrary to the investor's expectations, the price of the underlying investment falls, the price of the put warrant rises to compensate and can compensate for the price loss with appropriate weighting. Examples of derivative securities include warrants, bonds, certificates and futures.

Rule one is: never lose money. Rule two is: never forget rule number one. (Warren Buffett)

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