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Why is the margin of futures trading low and highly leveraged?
Leveraged trading, as its name implies, is to invest several times the original amount with a small amount of money in order to obtain a return or loss that is several times the fluctuation of the investment target. 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 reason why futures need leveraged trading is that leveraged trading can enlarge the funds in the market, thus increasing the trading volume. The reason why the futures market dares to provide a larger financing ratio is because the daily average volatility of the futures market is very small, only about 1%, and the futures market can use less margin from investors to resist market fluctuations without its own risk.

Futures leverage is to trade the full amount of commodity futures contracts with very little money. The leverage mechanism is margin trading, and the margin is like 10%, so his leverage is ten times, that is, he can use 100000 capital to trade 1 00000 capital goods futures contracts, which enlarges the leverage and improves the capital utilization rate, but the risk also increases.

What is futures leverage? Futures leverage is not only the fundamental risk source of futures trading, but also the charm of futures trading.

The lower the margin, the higher the leverage of futures!

Futures margin leverage: the leverage effect in futures is the original mechanism of futures trading, that is, the margin system. The "leverage effect" not only enlarges the tradable volume of investors, but also doubles the risks taken by investors.

Suppose a trader uses a sum of 50,000 yuan for stock or spot trading, and the risk of the trader is only brought by stocks or commodities worth 50,000 yuan.

If all the funds of 50,000 yuan are used for stock index futures trading, the risks borne by traders are brought by stocks or commodities worth about 500,000 yuan, which magnifies the risks by about ten times, and of course the corresponding profits are also magnified by ten times.