Foreign exchange margin is a kind of financial derivatives. It is a financial derivative that invests a certain proportion of funds in the foreign exchange market, trades in various currencies and conducts value-added transactions hundreds or even hundreds of times in the direction of exchange rate fluctuations, also known as leveraged foreign exchange. Margin foreign exchange came into being in the 1970s.

Foreign exchange margin has the characteristics of futures, also known as currency futures. It is a futures contract based on foreign exchange and the first variety of financial futures. Mainly used to avoid foreign exchange risk, that is, exchange rate risk.

Foreign exchange margin trading, also known as contract spot foreign exchange trading, margin trading and false trading, refers to that investors and financial companies (banks, dealers or brokers) who specialize in foreign exchange trading sign contracts to buy and sell foreign exchange on behalf of customers, pay a certain percentage (generally not exceeding 10%) of the trading margin, and buy and sell foreign exchange at a certain financing multiple of 654.38 million, hundreds of thousands or even millions of dollars. Therefore, this kind of contract transaction only makes a written or verbal commitment to a certain price of a certain foreign exchange, and then waits for the price to rise or fall before settling the transaction, so as to gain profits from the changing price difference, and of course bear the risk of loss. Because this kind of investment needs funds more or less, it has attracted many investors to participate in recent years.

Foreign exchange margin trading appears in the form of contract, and its main advantage lies in saving investment amount. When buying and selling foreign exchange by contract, the investment amount is generally not higher than 5% of the contract amount, but the profit and loss are calculated according to the total contract amount. The amount of a foreign exchange contract is determined according to the type of foreign currency. Specifically, the amount of each contract is 1250000 yen, 62500 pounds, 125000 euros, 125000 Swiss francs, and the value of each contract is about 100. The amount of each contract in each currency cannot be changed according to the requirements of investors. Investors can buy and sell several or dozens of contracts according to their own margin or margin. Under normal circumstances, investors can buy and sell a contract with a margin of $65,438+0,000. When foreign currency rises or falls, the investor's profit and loss is calculated according to the contract amount, that is, 654,380+10,000 USD.

Banks only have firm trading, but no margin trading.