Choose a margin trading company or a margin trading platform. Of course, it is safer to choose a state-owned bank. However, this sense of security may only be psychological. Although state-owned banks will not take away customers' deposits, most of them are in line with international standards. Few people have studied the basic rules of margin financing and securities lending and are used to monopolizing and bullying customers. This may be the fundamental reason why many customers will stay away from them and even have to choose overseas financial institutions. For example, the daily trading volume of the Shanghai Gold Exchange is only a few hundred kilograms, and the trading volume of a big individual in the international market may be so much. For another example, the daily trading volume of the national foreign exchange market is only several hundred million RMB, which is poor compared with a small bank in the world. This situation lasted for a long time, making the market have to doubt whether it wants to operate this market or not, and even dare not think that it is in line with international standards. Objectively speaking, China's foreign exchange, gold and other virtual financial markets are still very informal: monopoly operation can maintain the "overlord quotation"-the transaction cost is very high, the product design can not follow international standards, the quotation is used to being self-contained, the degree of humanization is very low, and few people are bound to participate.
On the contrary, overseas margin financing and securities lending companies can develop rapidly precisely because they have advantages that our domestic financial institutions do not have. Some people may ask, is it safe to participate in overseas margin trading? During the period of 1992, some overseas companies made bets in Shenzhen, Hainan and other places under the guise of foreign exchange futures or margin trading, resulting in many investors losing all their money and even some cases. But I also pointed out that 1992 margin companies are illegal. It is illegal not only in China, but all over the world. Most of the margin financing and securities lending companies established after 2000 are legally registered in the host country and subject to the financial supervision of the host country. Although the degree of supervision is loose and tight, in recent years, the so-called misappropriation of customer deposits has not been found in the operation, and there is no phenomenon that deposit companies run away with money. Moral hazard is not without, but many companies operate honestly. So I said responsibly, don't worry that the margin company will take the customer's margin, and don't worry that the earned money won't come back. Of course, there is no guarantee that all margin financing and securities lending companies have no moral hazard. On the contrary, I have repeatedly reminded investors to choose carefully.
So, what aspects should we pay attention to when choosing a margin trading platform?
First, supervision should be moderate, not just strict. Although so far, the margin financing and securities lending company has not taken away the customer's deposit, the risk of bankruptcy of the margin financing and securities lending company is not impossible or nonexistent. In recent years, due to the low volatility of the global financial market and the low requirements for the risk control ability of financial institutions, all margin financing and securities lending companies can survive without even losing money. However, once the market fluctuates greatly, especially sharply, it will be a severe challenge to the risk control ability of margin financing and securities lending companies and the supervision level of the host country. Financial supervision departments in various countries have gradually realized this problem. For example, countries such as Britain and Japan stipulated in 2006 that the registered capital of margin companies should be increased from $5 million to $50 million. The financial supervision departments of Japan, Australia, Britain and other countries also stipulate that margin financing and securities lending companies must connect with banks or sell 60% of their customer transactions to big banks, that is, some funds must be provided by larger financial institutions, mainly banks. In other countries, it is stipulated that the margin orders with the transaction amount exceeding 1 10,000 USD must be handed over to the bank to take orders (therefore, if the transaction amount on the margin platform exceeds 1 10,000 USD (about 1 10,000 lots), the number of lots is very slow, because the margin company must hand it over to the bank for confirmation before it can make a deal with customers). Therefore, when we choose a margin financing and securities lending company, we must first look at whether it is officially registered, what country it is regulated by, and the degree and level of supervision. Generally speaking, it is safer to choose the margin financing and securities lending companies in countries with moderate supervision, especially when there are systemic financial risks. The investor's protection network has two layers: big banks and countries. Small and medium-sized investors will be protected to a certain extent and generally will not be affected by the bankruptcy of margin financing and securities lending companies. On the contrary, in order to avoid supervision, some margin trading companies deliberately register in a small island or a country without supervision at all. It is best not to choose such a company. However, it is often mentioned that foreign countries do not supervise margin companies at all, so all margin companies are unsafe and even deceptive. This view is one-sided, which may also be caused by the shackles of traditional financial concepts. In the second chapter of this book, I have explained in detail that there is an important difference between foreign exchange margin trading and forex futures trading, that is, foreign exchange margin is a market-oriented business system, while foreign exchange futures is an exchange system. Exchanges are tangible, market-oriented businesses are intangible, and exchanges can manage them, but deposits cannot be managed (strict supervision). You can imagine how to supervise money exchange shops all over Hong Kong. Obviously, no daily supervision is much more practical and stronger than strict formal supervision. The so-called moderate supervision means strict supervision of registered capital, misappropriation of customer deposits and the proportion of counterparties. In addition, leave it alone and let the market take care of it. No one went to a company with bad margin, and there was a lot of abuse on the Internet. This is the best supervision.
The second is to be honest. It must be emphasized that margin companies do have many moral problems. Some margin trading platforms think that they are registered overseas and investors cannot sue. Therefore, they often change the charging standard and overnight interest calculation method, and even adjust the spread, making a "overlord" treaty. This kind of margin company, investors have complaints online, can be retrieved. Therefore, investors of the first-tier margin financing and securities lending companies must ask whether the charging standards such as commission and the calculation method of overnight interest will change at will, whether the trading spread is fixed and whether it will be adjusted at will with the changes of the market. It is also necessary to check online whether they have a "criminal record" of "overlord opening a shop" and whether they have changed the transaction costs without authorization!
The third is the stability of the margin trading platform itself and the consistency with the international market (quotation) data. Admittedly, due to the different levels and capabilities of risk management, the performance and advanced degree (server size) of the software used in the platform, and the distance between the network server and Chinese mainland, the stability of various margin platforms varies greatly. Some platforms even often collapse when the international market fluctuates greatly (to be fair, there may be no platform that does not interrupt trading completely, but the collapse, especially the collapse of big markets, is mostly malicious), which makes investors unable to trade. Of course, this platform cannot be selected. There are also platforms with poor stability, and commissions or spreads fluctuate with price changes. It is best not to choose this platform. More margin platforms are inconsistent with the international market (quotation) data, which is often unilateral and always unfavorable to investors. This situation is obviously malicious in the trading software, in order to transfer risks to investors. Of course, such a platform cannot be selected;
The fourth is the consideration of transaction cost. At present, the transaction costs of various margin platforms vary widely, some are as high as 20 points, some are only three points, and some even claim that there are no points in advertisements. It must be emphasized that any trading platform for margin financing and securities lending has to pay a cost, and it is mainly the transaction cost. Therefore, no cost or low cost is not necessarily good. However, due to different risk management levels, different transaction costs and different operation and management costs, it is normal for the commission (bid-ask spread) to be high or low, and investors should understand the difference. But the cost is too high or too low, but there are taboos, which may hide huge hidden dangers. Investors trade on the margin platform, of course, the lower the cost, the better. Because of competition, the margin platform also hopes to reduce costs. Because the choice of global investors is free, it is also realistic for the margin trading system to generally lower the charging standard-this is also the reason why the margin trading platform of domestic banks is not competitive. However, there are indeed many overseas margin financing and securities lending platforms that take advantage of the "ignorance" of domestic investors to deliberately raise fees and pass on risks and costs to investors too much. For example, some platforms charge as much as 16 or even 20 points, which is much higher than the cost of normal operation and obviously unfair to investors. On the contrary, we should also pay attention to a situation. Some platforms claim that they have no fees, only one or two points of spread, and no commission (spread is commission). It must be emphasized that no cost does not mean bank docking. Therefore, this is not a lie, but also very dangerous! As we know, in countries with strict supervision over margin trading, margin trading companies must connect with banks or sell 60% of customers' transactions to big banks, that is to say, most transactions must be handed over to banks for orders (only 40% can be tapped). Then, when the bank receives the bill, it must pay the fee, and the margin financing and securities lending company pays the fee to the bank without charging the investor. This only shows that they didn't dock with the bank, and 100% of the transactions were knocked away. Moreover, all margin platforms (computer networks) have maintenance costs and personnel costs, and may also include taxes. These expenses add up to at least three points. Therefore, investors must pay attention: there are only two possibilities for margin financing and securities lending companies that claim to accept only one or two points or even no points: First, they do not transfer orders to banks at all, and all investors' transactions are completely opposite, which is often called gambling in the market. Such a platform can certainly save money, but the risk is very high; The second is to make money by "running points", nominally spending less money, but actually a little more or more. It must be emphasized that there are many such platforms now. My conclusion in the investigation is that, generally speaking, about four points are the breakeven point for margin financing and securities lending companies to basically maintain normal operations, and six points are normal profits (it is very important for margin financing and securities lending companies and investors to maintain normal profit levels). Margin companies will try their best if they can't make money. Of course, if there are many customers and the transaction volume is large, 4-5 points can also make a good profit-the problem is that margin companies are mostly small companies, and there are not so many customers. More than 6 points, high cost, less than 3 points is self-deception, investors should be cautious;
Fifth, choose to design a more humanized margin platform. Simple operation is very important, dual-machine backup, telephone ordering and so on are very important. In addition, margin companies must consider the operation of customers, and the more humanized the design, the more investors like it. For example, the page design of some trading platforms is simple and clear, which is convenient for investors to place orders. The platform clearly shows the daily overnight interest gains and losses of each currency. In addition, it also has the function of reminding key prices, combined with the function of viewing transaction pictures. Alternative transactions are rich in currencies, and direct and cross transactions are complete. The order interface has market price, limit price and stop loss hedging; The interface can be saved for a long time, which is convenient for short-term operation; Non-market orders do not occupy margin, which is convenient for maximizing the use of funds. The only next transaction order is convenient for customers not to stare at the market in real time; Trading units can be selected flexibly, with a minimum of 0. 1 unit. Multiple orders can be flexibly adjusted to close positions. There is no price difference in the limit order, which protects the interests of customers to the maximum extent. These designs are considered for the convenience of customers' transactions, and investors can pay attention to similar designs when choosing the margin financing and securities lending platform;
Sixth, the deposit and withdrawal channels must be smooth. Margin may be more important than cash withdrawal, because there may be a need to cover the position immediately in margin trading. If the channel is not smooth, a remittance will arrive in three days, and the investor's position may have exploded. Of course, it is necessary to withdraw money quickly, but safety may be more important. Because margin companies and customers don't meet, in most cases, they contact each other through the internet. In order to prevent insiders from "stealing" customers' funds, many margin companies require customers to sign a "withdrawal application form" when withdrawing money. Some investors may think this is troublesome, which is necessary to protect investors. It must be admitted that most margin companies now have the problem of underground deposit and withdrawal, and few margin companies can solve this problem. Therefore, investors had better choose a margin company with formal deposit and withdrawal channels.
7. It is best to choose a margin company with an agent consulting service agency in China. Objectively speaking, few domestic institutions (including individuals) dare to openly represent the business of overseas margin financing and securities lending companies. Few doesn't mean nothing. And having an intermediary is definitely better than not finding anyone. Most offshore margin trading platforms are far from the horizon, and investors often encounter such problems and need to consult. It's unfair to investors to make (international) long distance calls for everything. China has an agent. First, it can help investors solve various problems such as account opening, fund deposit and withdrawal and operation at any time, and provide investors with various consulting services, including operational support. For investors, it is very important to find no one in China and never meet a manager. If a financing platform has no confidence in setting up an agency in Chinese mainland, how can investors rest assured?
Of course, it is best to choose the domestic margin trading platform. From the perspective of preventing moral hazard, only China can use the law to defend itself and protect the interests of investors. Although international law can also restrain malicious infringers (investors) in today's globalization, it is basically impossible to use international law for the concealment of margin companies and the renovation of infringement methods, not to mention the huge cost. Objectively speaking, investors now choose to open accounts abroad because they have no choice but to believe that foreigners may be more practical than China people. However, in any case, I still feel uneasy about sending money abroad. Therefore, like many investors, I hope that Chinese mainland will have a margin company and a margin trading platform. Of course, as I told you in the first paragraph, although there is a margin trading platform in China, it is not really in line with international standards at present, so it is difficult for overseas margin trading companies to enter China! However, I also want to report to investors that a margin participation model between the two has been born. That is, funds do not leave the country, or leave the country through formal channels of banks, and the trading platform is abroad. Although investors' investment is not through domestic state-owned banks, foreign banks have already carried out this business, and Jinyinhang is one of the operators of the margin platform. It should be said that this model at least eliminates the risk that many investors are afraid of being cheated. It should be said that this is not only the gospel of domestic margin investors, but also the great pressure of domestic banks and financial institutions. Because the competition has really come, and it is the weakest margin transaction for China people.