Leveraged trading is to invest several times the original amount with very little 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.

Extended data:

In the 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.

A margin account means that when you buy a stock, you only need to spend 25% to 30% of the total value of the stock. 25% when buying long positions and 30% when selling short positions. For example, if you deposit 1 10,000 yuan into a margin account, you can buy stocks with a total value of 40,000 yuan. This means four times the leverage.

Of course, 75% of the money is borrowed from brokers, and the interest rate is generally higher than that of banks and lower than that of credit cards; And your account must also keep 25% (buy more) to 30% (short) of the market value of the stocks you hold. There are many factors that affect deposits. This is because all kinds of securities are different in nature, denomination and supply and demand. Therefore, when the customer pays the deposit, it will also change with the changes of factors.

Baidu Encyclopedia-Leveraged Trading

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