Leveraged products definition

Leveraged products are financial instruments that enable traders to gain greater exposure to the market without increasing their capital investment. They do so by using leverage.

Any financial instrument that allows you to take a position that is worth more on the market than your initial outlay is a leveraged product. Different leveraged products work in different ways, but all amplify the potential profit and loss for a trader.

Leveraged products will almost always require you to pay an initial portion of the position you intend to open. This is called the margin.

Some of the main leveraged products are:

  • Spread bets
  • Contracts for difference (CFDs)
  • Forex trades
  • Options

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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.