This article is for educational purposes only. Trading with leverage, margin, futures, or derivatives carries a high risk of rapid or total loss. This is not financial advice and should not be used to make trading decisions.
Leverage Products – Definition and Examples
Leverage products, also called leveraged instruments, are financial derivatives that let traders control much larger positions than their initial investment would normally allow. By putting down a fraction of the trade value as margin, you take on amplified exposure where both gains and losses move faster, and the risk of rapid or total loss increases.
These instruments are now a cornerstone of modern trading, powering everything from forex and futures to crypto margin trading and spread betting. At Leverage.Trading, we specialize in analyzing how leverage, margin, and risk work across these markets, giving traders the tools and calculators to make informed decisions before stepping into high-risk products.
In this guide, I’ll break down the most popular leveraged products — forex, futures, CFDs, crypto, options, ETFs, and more — and show you how they actually work in practice. By the end, you will understand how the main leveraged products work in practice, which ones are too complex for newer traders, and how more experienced traders use them within strict risk and position sizing frameworks.
Leveraged products
What are leverage products?
Leveraged products represent speculative assets that offer traders larger exposure to a market without putting up the full value of the investment.
These instruments are firmly in the high risk category and anyone using them should tread carefully, especially in the early stages of their trading journey.
Some traders use borrowed funds to increase position size, but this also increases the chance of fast, large losses. Less experienced traders are generally better off learning with unleveraged products before they consider any form of margin.
Most serious leverage strategies are built around strict risk management techniques that aim to control position size, drawdowns, and liquidation risk when trading with large notional exposure.
Your leveraged position can be vulnerable to some added risk factors such as margin calls and liquidations.
Types of leveraged products
Leveraged products are derivatives of other underlying securities such as stock indices, commodities, national currencies, and even cryptocurrencies such as Bitcoin.
These products mean that retail clients can trade the same assets as they traditionally invest in but through leverage trading.
Each trader needs to understand the added risk factors and the characteristics of each market before attempting to trade them.
See below for a full description of all leveraged products.
Foreign Exchange (Forex)
Through the foreign exchange market, traders speculate on the prices of national currencies such as JPY, GBP, CHF, USD, and EUR.
When trading forex with leverage, your position size can be multiplied relative to your margin.
This means you only post a small portion of the total position value as margin, but even a small price move can trigger a margin call or liquidation if you are overexposed.
- Leverage – 1:1 – 1:5000
- Fees – Spread
- Difficulty level – Medium +
- Markets – National currencies (e.g. GBP, EUR, USD)
- Market opening hours – 24/5
- Type of broker – Forex brokers, CFD brokers, High leverage forex brokers
- Government regulation – NFA, CFTC, FCA, ASIC, ESMA, CYSEC
- Geographical accessibility – Global
Futures
Futures trading allows traders to control large notional positions with relatively small margin deposits, which makes the product capital efficient but also raises the risk of sharp drawdowns and forced liquidation.
Futures traders typically enter the markets for hedging purposes, day trading, or scalping.
- Leverage – 1:1 – 1:125
- Fees – Commission + Management fee
- Difficulty level – High
- Markets – Stocks, indices, commodities, forex, and cryptocurrencies
- Market opening hours – Specific trading hours
- Type of broker – Futures brokers
- Government regulation – CFTC
- Geographical accessibility – USA
Contracts for difference (CFD)
Contracts for difference, more commonly known as CFDs, are market derivatives that are traded globally by advanced traders and speculators.
CFD traders typically speculate on short-term price movement and the most traded markets are forex, stocks, cryptocurrencies, metals, and commodities.
- Leverage – 1:1 – 1:500
- Fees – Commission + Management fee
- Difficulty level – Medium
- Markets – Stocks, forex, commodities, indices, cryptocurrencies, ETFs, bonds
- Type of broker – CFD broker
- Government regulation – CYSEC, FCA, ESMA, ASIC
- Geographical accessibility – Globally except USA
A common tool to use is a CFD Calculator which can help you calculate your risk levels.
Options
Options contracts give the holder of the contract the right, but not the obligation, to buy a security at a specific date and price.
The options leverage comes from the difference in the premium paid and the real price of the underlying stock.
Options are highly speculative and complex leveraged products that benefit traders with a short-term outlook.
Options strategies such as a covered call, protective collar, straddle, and iron condors are commonly used by traders who want to execute a complex trading view.
- Leverage – 1:1 – 1:50
- Fees – Contract fee, service charges
- Difficulty level – High +
- Markets – Stocks, indices, commodities, cryptocurrencies, forex
- Type of broker – Options broker
- Government regulation – CFTC, SEC,
- Geographical accessibility – Global
Financial Spread betting
Financial spread betting is a type of leveraged instrument that lets traders trade on price differences of an underlying asset without owning the asset.
With spread betting you can speculate on both rising and falling prices, which gives day traders flexibility, but it also makes it easy to overtrade if you do not have strict rules for entries, sizing, and stops.
A common practice among spread bet traders is to use a spread betting calculator to calculate the overall risk profile for each trade.
- Leverage – 1:1 – 1:5000
- Fees – Spread, rollover costs, inactivity fees, commission
- Difficulty level – Medium +
- Markets – Indices, stocks, bonds, forex, commodities, cryptocurrencies
- Type of broker – Spread betting broker
- Government regulation – FCA, BaFin, FSCA
- Geographical accessibility – Global
Cryptocurrency
Cryptocurrency leverage trading is the latest leveraged product to have penetrated the global market.
Crypto coins such as Bitcoin, Ethereum, and Solana are some markets traded in this field.
Many crypto venues let traders open leveraged positions with relatively small margin deposits. The low entry size does not change the underlying risk, since a single sharp move can still wipe out the full margin on the position.
In crypto margin trading, the products are based on a margin collateral and a leverage ratio, which is provided by the exchange.
- Leverage – 1:1 – 1:125
- Fees – Commission, rollover fee, funding rate fee
- Difficulty level – Medium +
- Markets – Cryptocurrencies
- Type of broker – Crypto exchange, CFD broker, Spread betting platform
- Government regulation – FinCEN, CFTC, FFAJ, FSA, AUSTRAC, FINTRAC, CySEC, NFA, ASIC
- Geographical accessibility – Global
ETFs
ETFs offer leverage products to investors through electronically assembled baskets of underlying assets such as stocks, indices, and commodities.
Many leveraged ETFs use lower ratios than futures or margin trading, and they sit inside a regulated wrapper, but they can still amplify both gains and losses and are not free from risk, especially if they are held for longer periods.
Most speculators who seek these types of investments have a long-term approach where leverage stock trading is in high demand.
- Leverage – 1:1 – 1:20
- Fees – Commission
- Difficulty level – Medium
- Markets – Indices, commodities, stocks, bonds, national currencies
- Type of broker – Online brokers, banks, investing apps
- Government regulation – SEC, local financial authorities
- Geographical accessibility – Global
Pros and cons you should know about
Comparing these instruments to standard financial markets there are some of the more noticiable drawbacks that are worth highlighting and some potential benefits.
Cons
- High risk of large and rapid losses, including full account wipeouts if positions are unmanaged
- Many products are structurally complex and can behave differently than traders expect
- Strong risk management is not optional, it is a core part of surviving with leverage
- Trading and funding costs can rise sharply with leverage and frequent activity
Pros
- More sensitivity to price moves, which can increase profit potential on well controlled positions
- Access to markets and structures that are not always available through unleveraged accounts
- Ability to take exposure with less capital tied up per trade, if risk is tightly controlled
- Flexibility to express multiple views at once, provided you can manage the combined risk
Conclusion
Leveraged products give traders with limited capital the ability to take on large notional exposure across markets such as forex, stocks, crypto, commodities, indices, and bonds. That extra exposure cuts both ways and can drain a small account much faster than many traders expect.
The most popular instruments listed in this article are forex, futures, options, CFDs, ETFs, spread betting, binary options, and cryptocurrencies.
With these products, the size and speed of both profits and losses are magnified, so mistakes and poor timing become much more expensive.
Anyone considering leveraged products should already have a basic, profitable approach in spot or unleveraged markets and then put risk management at the center of their process before they scale into these instruments.
Anton Palovaara
This article is published under Leverage.Trading’s Risk-First Education Framework, an independent learning system built to help traders quantify and manage risk before trading.
