Margin concept: The so-called margin refers to the use of leverage to increase investors’ purchasing power.

In summary, foreign exchange refers to foreign currency or various means of payment expressed in foreign currency for international settlement of claims and debts.

Foreign exchange margin

Foreign exchange margin is one of the financial derivatives instruments. It is a financial derivative that uses a certain proportion of funds to buy and sell various currencies in the foreign exchange market, and conducts value-added transactions that expand hundreds or even hundreds of times in response to the direction of exchange rate fluctuations. It is also called leveraged foreign exchange. Margin foreign exchange was created in the 1970s.

Foreign exchange margin has the characteristics of futures, also known as currency futures. It is a futures contract based on foreign exchange and is the first type of financial futures. It is mainly used to avoid foreign exchange risks, that is, exchange rate risks.

Foreign exchange margin trading, also known as contract spot foreign exchange trading, margin trading, and virtual trading, refers to the signing of entrusted transactions between investors and financial companies (banks, traders, or brokers) that specialize in foreign exchange trading. For foreign exchange contracts, by paying a certain ratio of trading margin (generally no more than 10%), you can buy or sell foreign exchange of 100,000, hundreds of thousands or even millions of dollars at a certain financing multiple. Therefore, this kind of contract-based buying and selling is just a written or verbal commitment to a certain price of a certain foreign exchange, and then waiting for the price to rise or fall before settling the sale, making profits from the changing price difference, and of course also bearing the responsibility. risk of loss. Since this kind of investment requires large or small amounts of capital, it has attracted the participation of many investors in recent years.