What does foreign exchange margin mean?
Foreign exchange margin refers to the foreign exchange transaction in forex futures trading where the customer takes the margin as the transaction guarantee. Foreign exchange margin is a personal financial product.
Foreign exchange margin trading, commonly known as speculative foreign exchange and contract spot foreign exchange trading, means that investors pay a certain percentage of trading margin (generally not more than 10%) by signing contracts with financial companies such as banks or brokers, and buy and sell foreign exchange of 65,438+10,000, hundreds of thousands or even millions of dollars according to a certain financing multiple.
Foreign exchange margin ratio = floating net value/used margin
According to the level of foreign developed countries, the general financing ratio is maintained at more than 10-20 times. In other words, if the financing ratio is 20 times, investors can conduct foreign exchange transactions as long as they pay a deposit of about 5%. That is, investors only need to pay $5,000 to conduct foreign exchange transactions of $65,438+$0,000,000.
Risks of foreign exchange margin:
Foreign exchange margin is risky. Although foreign exchange margin trading can effectively control the amount of losses of investors, it can also amplify the rate of return of investors, which fully reflects its leverage effect of being small and broad. But it is precisely because of this high leverage that it has higher risks.
Although the more margin, the greater your profit will be, but the corresponding risks will also increase a lot, so when conducting foreign exchange transactions, the margin should be controlled within a reasonable range to ensure that even if there is a loss, there will be no chance to start again.