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Why can foreign exchange transactions be enlarged?
This kind of transaction is called foreign exchange margin transaction, which means that by signing a contract with a designated investment bank, opening a trust investment account and depositing a sum of money (margin) as a guarantee, the (investment) bank (or brokerage firm) sets the credit operation limit (that is, the leverage effect of 20-200 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.