Leverage is the original mechanism of futures trading, namely the margin system.
The leverage effect can magnify the transaction amount paid by investors, but also increase the leverage ratio of profits obtained by investors, and the risks borne by investors will increase exponentially.
Leverage is a highly dangerous money game that is quite common in the country, especially when dealing in a legal gray area.
In leveraged forex trading, a trader can trade 10 to 100 times as much as he puts down a margin of just 1 to 10 per cent.
They are trading on margins as low as 0.5% and up to 200 times that amount.
Since leveraged forex trading requires very little capital from investors, they can hold their positions indefinitely;
Coupled with flexible trading methods, many investors have been attracted.
Due to the time difference between the Asian market, the European market and the American market, they are connected into a 24-hour global operation.
No matter where the investor is, he can participate in any market, at any time, the foreign exchange market is a market without time and space barriers.
Leveraged foreign exchange trading looks like a small profit, in fact, it is a high-risk financial leverage trading tool.
Because participants in deposit trading only pay a small percentage of the margin, the normal fluctuations of outbound call prices are magnified several times or even tens of times, and the reporting and losses brought by this high risk are very surprising.
On the other hand, the daily turnover of the market can reach more than 1 trillion yuan, and many international financial institutions and funds participate in it.
Economic policies of various countries are constantly changing, and various sudden events occur from time to time, which can be the cause of large fluctuations.
Large organizations employ a lot of human resources, get first-hand information from a variety of sources, and the investment team uses the results of the analysis to buy and sell profits in real time.
The amount of margin in leveraged forex trading is small, but the actual amount of money used is huge, and the daily fluctuations of the outside world are so large that investors can easily get wiped out if they make a mistake in judgment.
In the event of unexpected market conditions, two dollars to take timely measures, not only the principal is lost, but also may add to the balance.
Investors should not be complacent.
When deciding on leverage ratios, one must understand the risks involved. Us inflation is “stronger than a tiger”, gold and the dollar are hitting new highs, and oil prices may be heading for a third straight decline amid fears of COVID-19.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.