Leveraged trading, also known as margin trading. As the name implies, it is to invest several times the original amount with a small amount of money in order to obtain a rate of return that fluctuates several times relative to the investment target, or a loss. Different transactions have different leverage ratios. For example, the leverage of futures is generally 10 times, that is to say, if the market price changes in the opposite direction to your expectation 10%, the capital (margin) you invested will lose 100%, and if the market changes in the same direction as expected, the income will be 100%. If it is a leveraged transaction of 100 times, the market price changes by 10%, and the investment profit and loss reaches 1000%. Because the increase or decrease of margin (small funds) does not move according to the fluctuation ratio of the underlying assets, it is very risky.

Foreign exchange margin trading refers to signing a contract with a (designated investment) bank, opening a trust investment account, depositing a sum of money (margin) as a guarantee, and the (investment) bank (or brokerage bank) sets the credit operation limit (that is, the leverage effect of 20-400 times). Investors can freely buy and sell equivalent spot foreign exchange within the quota, and the gains and losses arising from the operation will be automatically deducted or deposited into the above investment account. Therefore, small investors can obtain a larger trading quota with smaller funds, enjoy the same foreign exchange trading purposes as global capital to avoid risks and create profit opportunities in exchange rate changes.

In foreign exchange leveraged transactions, the leverage ratio is between 20 times and 400 times, and the standard contract in the foreign exchange market is 6,543,800 yuan per lot (referring to the base currency, that is, the previous currency of the currency pair). If the leverage ratio provided by the brokerage firm is 20 times, then the buyer and seller need a deposit of 5,000 yuan (if the currency of the transaction is different from the account deposit, it needs to be converted); If the leverage ratio is 100 times, the buyer and the seller need a deposit of 1000 yuan.