High leverage investment:

For example, if you buy foreign exchange or futures, if you pay a deposit of 5,000 yuan and the leverage is 2 times, you can invest 10,000 yuan. At the same time, risks and benefits are magnified. If you lose money, it will be directly deducted from your margin. When your margin reaches a minimum ratio, such as 70%, it means you have lost 1,500 yuan, and the remaining 3,500 yuan cannot be used anymore. Come to trade.

Example:

Suppose the account capital is 6,000 US dollars and buying 1 euro/dollar drop (one pip is 10 US dollars):

1:20 times Leverage: 5,000 US dollars of capital are occupied, and 1,000 US dollars are active in the account, which can resist the risk of 100 points. When the market price fluctuates upward and loses 100 points, a margin call occurs, and the system will forcefully close the position for you. (The risk is extremely high)

1: 100 times leverage: 1,000 US dollars of capital are occupied, and 5,000 US dollars are active in the account, which can resist the risk of 500 points. When the market price fluctuates upward, the loss is 500 points. When a margin call occurs, the system will force you to close your position. (Medium risk)

1: 400 times leverage: 250 US dollars of capital are occupied, and 5750 US dollars are active in the account, which can resist the risk of 575 points. When the market price fluctuates upward, the loss is 575 points. , the system will force you to close your position if a margin call occurs. (The risk is lower than both 1:20 and 1:100 times leverage)

Finally, we can draw this conclusion: under the conditions of the same funds in the account, the same number of lots (one contract is called 1 lot), the lower the leverage ratio, the smaller the risk! If you are a novice, you can first go to FXSOL Global Financial Network to register a foreign exchange demo account, and register for free first. Take a look at how to simulate foreign exchange speculation, and see what kind of gains and differences there are when choosing different leverages. In this way, you will understand as you learn more. Leverage is also a double-edged sword. It is not good for the leverage to be too high or too low. When it is too high, it can easily lead to the inability to properly grasp the position and the inability to allocate funds well. When we speculate in foreign exchange, we must choose carefully when choosing leverage. .