Leveraged foreign exchange trading is to invest several times the original amount with a small amount of money. In order to expect to get a rate of return that fluctuates several times relative to the investment target, or lose money. Because the increase or decrease of margin (small funds) does not move according to the fluctuation ratio of the underlying assets, it is very risky.

The international financing multiple or leverage ratio is between 20 times and 400 times. The standard contract in the foreign exchange market is 6,543,800 yuan per lot (referring to the base currency, that is, the previous currency of the currency pair). If the leverage ratio provided by the brokerage firm is 20 times, the buyer and the seller need a deposit of 5,000 yuan (if the transaction currency is different from the account deposit currency, it needs to be converted); If the leverage ratio is 100 times, the buyer and the seller need a deposit of 1000 yuan.

The reason why banks or securities firms 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 is a spot transaction, which has some characteristics of futures trading, such as buying and selling contracts, providing financing, etc., but its position can be held for a long time until voluntary or compulsory liquidation.