Here is a simple example:

An investor wants to purchase a piece of real estate worth $1,000,000, but he only has $10,000 in cash available. He used the money as a deposit for the real estate and borrowed the remainder from a bank. Therefore, the customer actually owns $10,000, or 1 of the real estate, while the bank owns 99. One year later, the property is worth $1,010,000. If the customer uses his own property to pay the entire purchase price, his profit on this investment is 1. However, since he only invested $10,000, he effectively doubled his entire fortune. His $10,000 investment in the property has now appreciated by another $10,000, which means he has made a profit of 100.

Foreign exchange margin trading is when investors use the trust provided by a bank or broker to conduct foreign exchange transactions. It makes full use of the principle of leveraged investment and is a forward foreign exchange trading method between financial institutions and between financial institutions and investors. During the transaction, investors only need to pay a certain margin to conduct 100-limit transactions, so that investors with small amounts of funds can also participate in foreign exchange transactions in the financial market. According to the standards of foreign developed countries, the general financing ratio remains above 10-20 times. In other words, if the financing ratio is 20 times, then investors only need to pay a margin of about 5 times to conduct foreign exchange transactions. That is, investors only need to pay $5,000 to make a $100,000 transaction.

Margin is a good faith deposit that gives investors the right to buy or sell the priority contract value of an investment product. For example, with a margin of $1,000, an investor can obtain a loan on an investment product worth $100,000.