On the one hand, as the subject said, the higher the leverage ratio, the less capital invested and the higher the capital utilization rate. Even if the futures company is strong, the capital loss is less.
. So under what circumstances will futures companies force customers to hold positions? That is, when a customer's futures account can be negative, it means that the funds in the customer's account are not enough to maintain the margin ratio in future positions, and it is necessary to close some or even all positions to replenish funds to maintain the original leverage level.
On the one hand, as the subject said, the higher the leverage ratio, the less capital invested and the higher the capital utilization rate. Even if the futures company is strong, the capital loss is less.
On the other hand, the higher the leverage ratio, the weaker the ability to resist the risk of price fluctuations, and it is easy to be forced to close the position to maintain the original leverage level.
. But it is common for futures prices to fluctuate repeatedly. If they are leveled, the floating loss will become the actual loss. Even if they return to their original positions after hours, the subject can't resume their previous positions because of the fact that they have already lost money, and some positions have been "forced to get off". For example, the rebar market in the figure below is normal. High leverage is not necessarily a good thing, but it will make the positions held more risky.
On the other hand, the higher the leverage ratio, the weaker the ability to resist the risk of price fluctuations, and it is easy to be forced to close the position to maintain the original leverage level.
Therefore, it is precisely because of the mode of margin trading that for futures, higher requirements are put forward for leverage ratio, fund management, position ratio management and balance, so the leverage ratio is not as high as possible, which is a double-edged sword!