What is the term stock leverage explosion? What does this mean? What's the impact on us? For newcomers who have just come into contact with the stock market, all proper nouns seem so strange. The following is what the stock leverage explosion brought by Bian Xiao means. I hope it will help you.
What does the stock leverage explosion mean?
Leveraged short position refers to the operation of a securities company to close the investor's account when the loss is greater than the deposit in the account in the stock margin trading. When there is no funds in the general account, when the deposit loses half, the securities company will force the liquidation.
Margin trading is leveraged trading. Financing means that investors borrow money from securities companies to buy shares and repay the principal and interest within the agreed time limit. Securities lending refers to the behavior that investors borrow shares from securities companies and sell them, buy the same number and variety of shares within the agreed time limit and return them to brokers and pay corresponding fees.
What does lever explosion mean?
Leveraged short position of stock refers to the over-the-counter allocation/financing of stock investment. When the stock you buy falls to a certain price, you must add a margin. If there is no additional margin, the system will automatically sell the investor's stock to repay the debt. If the stock is leveraged, it will face greater risks and be prone to losses.
Leveraged stock investment refers to stocks purchased through borrowing funds, especially through margin trading. It can be divided into three types, namely, stocks bought by cash margin, stocks bought by equity margin and stocks bought by legal margin.
When investing in stocks, users must have knowledge of stocks, and at the same time, they need to open an account in a securities firm before investing in stocks. Moreover, when buying stocks, it is best to choose to intervene in the position where the stock price is low, and then sell it after the stock price rises. Of course, there may be losses after buying it.
You must measure your risk tolerance when investing in stocks, because stock investment is risky and easy to lose money. Moreover, users must maintain a good attitude when investing, and a good attitude can make users make correct judgments when investing in stocks.
What is a short position?
Short positions can also be called forced liquidation. Simply put, the customer's interest in the investor's margin account is negative, and the loss is greater than the margin in the account. At this time, the company will carry out compulsory liquidation of the investor's financial account. The calculation method of the remaining funds after the strong level is the total funds MINUS your losses, and usually there will be some funds left. Generally speaking, it is often used in spot and futures trading. In addition, short positions are more serious losses than short positions, which means that investors have no funds in their accounts, but they have to return them to the company.
In futures, if there is a short position, what investors need to do is to make up for the loss and may be sanctioned by law. In China's current futures market, if the loss exceeds the margin, the futures company will close its position independently.