A. Reducing transaction costs B. Providing guarantee C. Adjusting transaction scale D. Avoiding transaction risks

Margin trading means that investors can conduct large transactions beyond their own financial strength by providing only a part of funds as a deposit, which improves the utilization rate of funds. In general, the deposit can be regarded as a down payment. You only need to pay a certain deposit before you can have the right to trade goods. The ratio of margin is the leverage ratio.

The relationship between leverage and margin ratio: the total amount of funds in a transaction divided by the margin ratio is leverage, and leverage is inversely proportional to margin. In market transactions, the relationship between leverage and margin is close. The greater the leverage, the smaller the margin occupied by the transaction, and the smaller the leverage, the larger the margin occupied by the transaction.

Leverage multiple = 1/ margin ratio. If the margin rate is 0.5%, then leverage = 1/0.5%=200 times. For example, at present, the gold price is 1 0,800 USD/oz, 1 gold in hand = 1 0,000 oz, and the margin ratio is 0.5% (actually calculated according to the standard of account opening brokers), so the margin is = 1 0,800×1.

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Margin is the fund that investors must mortgage in order to obtain the position contract. The exchange has minimum requirements for trading members (such as futures brokerage companies), and member units (brokerage companies) will make other provisions for investors. The margin ratio is the ratio of the margin you need to mortgage to the total contract value.

Trading leverage is to enlarge the floating profit and loss ratio of account funds at the same time, which is stipulated by trading rules and is fixed. Brokerage companies cannot be changed.

The margin ratio is used to measure the amount of contract funds that can be bought and sold, and the trading leverage is used to calculate the profit and loss of account funds. They are not necessarily related to each other. What they have in common is that they improve the utilization rate of funds and provide opportunities for ordinary investors to get involved in venture capital.