Structured products are investment solutions that combine one or more underlying assets (e.g. shares, bonds, stock indexes) with a derivative component. They can be used to bank on different market scenarios. That way, you can earn a positive return even when the markets trend sideways.

Furthermore, a certificate can be formed on a rising or falling price of the underlying. This enables the investor to participate in falling prices as well. However, this possibility also existed in the past in the form of short selling.

A certificate is an innovative investment instrument that allows experienced investors to realize specific needs. These include:

• achieving a very high percentage profit with a small capital investment
• Hedging (hedging a stock position, for example) with an offsetting derivative
• Participation with comparatively low risk of loss, for example, through discount or bonus certificates, which, however, also limit the gain
• highly speculative trading in the shortest time periods up to the seconds and minutes range (so-called scalping)

These points require some explanation.
Basically, derivatives trading can be very profitable, because such financial instruments can move by several hundred percent per day and even per hour or in a few minutes. To the same extent, of course, they are subject to a risk of loss. The investor can limit this risk by setting a stoploss, but this in turn limits his options for action. Leveraged financial products are very volatile in relation to their underlying.
A stoploss with a risk of ten or twenty percent is violated very quickly. Therefore, dealing with such products requires a lot of experience and usually also continuous market observation.
Furthermore, these products are structured very differently, which requires specialist knowledge to use them.
Third, in principle, they are actually used for inexpensive hedging of large equity or commodity positions, but private investors practically never use them for this purpose.

A derivative is a financial instrument. It functions like a contract between two parties that stipulates that a certain underlying asset can or must be purchased at a certain point in time at a price agreed in advance.

Derivatives or certificates are forms of investment derived from underlying assets (shares, commodities, foreign exchange, ETFs, interest rates, etc.) and are certified in terms of their legal nature as debt securities, bearing a derivative (i.e. derived) character. In practice, one and the same product – a warrant, a CFD, a knock-out – may be designated in one way or another.