Most investors will choose a low multiple leverage of 1-5 times when raising funds for the first time. This share is normal in the industry. But some people want to choose a higher leverage ratio, such as 10 times leverage ratio. In fact, the leverage ratio of 10 times is very unpopular and the risk is too great.

After all, the amount of capital is expanding, many people can't control it, and the risk of capital contribution under high leverage is greatly expanded. This will inevitably bring a lot of unnecessary trouble. So when you make a choice, you should clearly know your trading level, how much money you have, and whether the financing channel you choose is normal. In short, the greater the leverage, the greater the risk.

For investors, high leverage is like a double-edged sword, which can make a big profit when the market is good, make full use of funds and make a big profit with small capital; When the market falls, high leverage will accelerate the loss, and it is often the fastest. The case of capital allocation leverage is not as high as possible, because high returns also bring high risks, and investors must not be too confident.

So we must choose the right lever to live within our means. Before allocating funds, investors should first think about their future operation methods and risk tolerance, and find the leverage ratio that suits them.

Author: Yi Quankang yiyiyiyi

Link:/question /3 178 19473/ answer/1490834447.

Source: Zhihu.

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