Leveraged trading is to use a small amount of money to invest several times the original amount. In order to expect to obtain several times the yield relative to the fluctuation of the investment target, or to lose money. Because the increase or decrease of the margin (the small amount of funds) does not move according to the fluctuation ratio of the underlying assets, the risk is very high.

The international financing multiple or leverage ratio is between 2 times and 4 times. The standard contract in the foreign exchange market is 1, yuan per lot (referring to the base currency, which is the previous currency of the currency pair). If the leverage ratio provided by the broker is 2 times, the buyer and seller need a margin of 5, yuan (if the currency of the transaction is different from the currency of the account margin, it needs to be converted); If the leverage ratio is 1 times, the buyer and seller need 1 yuan margin.

The reason why banks or brokers dare to provide a larger financing ratio is because the daily average fluctuation of the foreign exchange market is very small, only about 1%, and the foreign exchange market is a continuous transaction. Coupled with perfect technical means, banks or brokers can completely resist market fluctuations with less margin from investors without taking risks themselves. Foreign exchange margin belongs to spot trading and has some characteristics of futures trading, such as buying and selling contracts and providing financing, but its position can be held for a long time until it is voluntarily or forcibly closed.

Extended information:

In stock market operation, if you want to buy leveraged stocks, you only need to submit a deposit to the relevant business hall and sign a leverage agreement to buy them.

margin account means that when buying stocks, you only need to spend 25% to 3% of the total value of the stocks. 25% when buying long and 3% when selling short. For example, if you put 1, yuan into a margin account, you can buy stocks with a total value of 4, yuan. That means four times the leverage.

Of course, 75% of the money is borrowed from securities firms, and the interest rate is generally higher than that of banks and lower than that of credit cards. And your account must also maintain 25% (buy long) to 3% (sell short) of the market value of the stocks you own. There are many factors that affect the deposit. This is because the nature of various securities is different, the denomination is different, and the supply and demand are different. Therefore, when customers pay the deposit, they will also change with the changes of factors.

Baidu Encyclopedia-Leveraged Trading

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