Complex products are a derivative product because they enable you to speculate on financial markets such as shares, forex, indices, and commodities without having to take ownership of the underlying assets.
Instead, when you trade a complex products, you agree to exchange the difference in the price of an asset from the point at which the contract is opened to when it is closed. One of the main benefits of complex products trading is that you can speculate on price movements in either direction, with the profit or loss you make depends on the extent to which your forecast is correct, which is beneficial, especially nowadays, with a sudden change in market trends and crisis.
While leverage enables you to trade large, it is important to remember that the profit or loss will still be calculated on the full size of the complete position. In our example, that would be the difference in the price of 1000 shares from the point of opening the trade to the point of closing it, which means both profits and losses can be hugely multiplied compared to the final outcome, and that losses can largely exceed deposits. For this reason, it is important to pay attention to the leverage ratio and make sure to trade within means.
Complex products trading is also characterized by being leveraged, which means you can have the ability to trade a large position without having to commit the full cost of it. Say you wanted to open a position equivalent to 1000 top company shares. With a standard trade, that would mean paying the full cost of the shares in advance. With a complex products, you might only have to put up a fraction of the cost.
