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What is the principle of financial leverage?
What did the stock market leverage mean before? I have a certain degree of research on leverage, but I haven't fully understood the principle of financial leverage. Today, let's look at the principle of financial leverage.

1, the principle of financial leverage is actually a multiplication problem, which is the way to enlarge the original funds.

2. Profit and loss will increase according to a certain proportion. Therefore, when using financial leverage, we must fully understand the risks we need to face and make a summary when encountering risks. This is why we can't use exactly the same strategy when operating the stock and futures markets. Therefore, compared with stocks, futures funds are magnified several times, and a little loss is no small loss. Of course, everything has two sides. When futures are profitable, their profits are far greater than those of stocks.

3. Where stocks are leveraged, the most important margin trading at present is to add leverage according to the ratio of 1: 1, that is, the original capital of 1 will become 2 million. If you earn 10 at this time, the profit is 200,000, and the loss is also 200,000.

4. When the stock market is relatively strong, many investors will make a lot of profits by leverage, but in a bear market, these investors rarely protect their capital and lose profits or even principal under the action of leverage. This is also why the stock market crash occurred on 20 15, and many financing sectors exploded.

Knowing the principle of financial leverage, we will understand that the current financial development system has a very strong connection with this tool, and the global financial asset marketization trend is getting stronger and stronger.