Margin trading means that investors can trade 100% only by paying a certain margin, so that those investors with little capital can also participate in the crude oil brokerage market to trade crude oil.
It refers to the trading conducted by investors on the trading platform (similar to foreign exchange) provided by crude oil brokers (financial institutions). It makes full use of the principle of leveraged investment, which is a forward trading method between crude oil brokers and between crude oil brokers and investors.
According to the level of foreign developed countries, the general financing leverage ratio remains above 10-50 times. In other words, if the financing ratio is 20 times, then investors can trade crude oil as long as they pay a deposit of about 5%. That is, investors only need to pay $5,000 to trade $65,438+$0,000,000.
Margin is a sincere margin, which gives investors the right to buy or sell investment products with priority contract value. For example, with a deposit of US$ 65,438+US$ 0,000, investors can get a loan for investment products worth US$ 65,438+US$ 0,000,000.
A summary example of crude oil margin trading
An investor wants to buy a piece of crude oil worth $65,438+0,000,000, but he only has $65,438+0,000,000 in cash. He used the money as a deposit for crude oil, and borrowed the rest from crude oil brokers (financial institutions). Therefore, the customer actually owns 10000 USD, that is, 1% crude oil, and the crude oil broker (financial institution) owns 99%. A year later, the value of crude oil was 10 10000 USD. If the customer pays all the purchase price with his own property, then his profit in this investment is 1%. However, because he only invested $65,438+$00,000, he actually doubled all his property. His investment of $65,438+00,000 in this crude oil has appreciated by $65,438+00,000, which means that he has made a profit of 65,438+000%.
Specific examples of crude oil margin trading
CFD contract for the sale of American crude oil
The face value of an American crude oil CFD is 65,438+0,000 barrels (42,000 gallons), the bid spread is 6 cents, the minimum variation unit is 0.065,438+0 or 65,438+0 cents, and the margin requirement for each contract is 65,438+0,500 dollars.
Customers believe that the price of crude oil is overvalued and will soon fall. In view of this situation, the customer decided to sell the American crude oil contract for difference. The price of US crude oil is 55.45 USD /5 1. If a customer sells 5 lots at 55.45 USD, a deposit of 7,500 USD is required, and each lot needs at least 65,438 USD +0.500 USD.
The price of crude oil dropped to $54.99 /05 (54.99–55.05). The customer's response to this information was to close the position and buy five lots of American crude oil CFD at the price of $55.05, so the customer made a profit of $0.4 per barrel per contract. If each contract is 1000 barrels, then the fluctuation per cent is equal to 10 dollars, (1000 barrels * 1 point = 10 dollars), in this case, each contract customer will get 40 points or 400 dollars in profit. The total profit is 2000 dollars (400 * 5 = 2000 dollars).