Margin trading refers to the business activities of securities companies that lend money to customers to buy or sell the underlying securities and collect collateral.

Securities transactions arising from margin trading are called margin trading.

Margin trading is divided into two categories: margin trading and margin trading.

Financing transaction: refers to the transaction behavior that a customer applies for financing to buy the underlying securities with the funds and securities in his credit account as collateral, and the securities company advances funds for the customer when settling with the securities registration and settlement institution to complete the securities transaction.

Margin trading: refers to the trading behavior that a customer applies to a securities company to sell the underlying securities with the funds and securities in his credit account as collateral, and the securities company advances the securities for the customer when settling with the securities registration and settlement institution to complete the securities trading.

1. Advantages of margin trading:

1, cost advantage: low rate, no interest;

2. Flexible term: you can apply for an extension when it expires;

3, leverage two-way profit: clever use of leverage effect, long and short can be profitable.

Second, the role of margin financing and securities lending:

1. Margin trading helps investors to express their expectations of the actual investment value of stocks, guide the stock price to reflect its intrinsic value, slow down the fluctuation of securities prices to a certain extent, and maintain the stability of the securities market.

2. Effectively relieve the pressure of market funds. There are many financing channels for securities companies, such as funds, so the liberalization of financing and the entry of bank funds into the market will be divided into two steps. In the downturn of the stock market, it can not only solve the urgent need, but also bring quite good investment income to institutions that need capital adjustment.

3. Margin trading is conducive to active market transactions, and the amplification effect of on-site stock funds is also a way to stimulate the active A-share market. Wu Chunlong and Chen Xiangsheng, analysts of CITIC Jiantou Securities, believe that the margin trading business is conducive to increasing the liquidity of the stock market. 4. Margin trading can not only bring a lot of commission income and spread income to brokers, but also generate many opportunities for product innovation, making it possible for self-operated businesses to reduce costs and hedge.

Third, the difference between margin trading and general securities trading.

1. You can borrow funds or securities: when customers predict that the price of securities will rise and the funds on hand are insufficient, they can borrow funds from securities companies to buy securities; If you predict that the price of securities will fall, you can borrow securities from securities companies and sell them. For ordinary securities trading, customers must have sufficient funds in advance when purchasing securities; When the price of securities falls, customers cannot make a profit. )

2. Need collateral: In addition to the entrusted transaction relationship, there is also a loan relationship of funds or securities between the customer and the securities company. It is necessary to pay a certain percentage of deposit to the securities company in the form of cash or securities in advance, and deliver the securities bought by financing and the funds obtained from short selling to the securities company as collateral. (In general securities trading, the relationship between the customer and the securities company is only entrustment, and there is no need to provide guarantee to the securities company. )

3. The scope of trading securities is limited: only guaranteed securities and underlying securities can be bought and sold. (Ordinary securities trading, you can buy and sell all the securities listed and traded on the stock exchange. )

4. Limited trading term: limited by the term of margin financing and securities lending contract (currently the longest is 6 months) and the term of margin financing and securities lending contract (currently the longest is 2 years). (Ordinary securities trading, investors can hold it indefinitely according to their own wishes. )

5. Gain and loss amplification: Due to the loan relationship between funds and securities, the investment gain and loss of customers may be amplified; When the loss is large, in addition to losing all the principal, it is even necessary to repay additional liabilities. (In ordinary securities trading, the customer's investment profit and loss cannot exceed the principal. )

Fourth, the essence of margin financing and securities lending:

The essence of margin financing and securities lending is two words: tools.

Although it neither provides stock selection methods nor investment strategies, it still cannot change its importance.

Why do you say that? Because margin financing and securities lending can be constantly changing. No matter how the A-share market changes, as long as you have your own investment strategy and stock selection logic, margin financing and securities lending can help you achieve your goal.