What does digital currency mean as leverage
Now the popular digital currency futures is bitcoin futures. On December 11, 2017, Beijing time, CBOE launched the bitcoin futures XBT, and the market reaction was hot, triggering the circuit breaker mechanism many times. CME of Chicago Mercantile Exchange launched bitcoin futures BTC on December 18, 2017, which brought about great fluctuation
the two major bitcoin futures procts have the following similarities and differences, which are worth noting:
1. XBT unit is 1 bitcoin, BTC is 5 bitcoins
The minimum price change: XBT is $10 / bitcoin, BTC is $5 / bitcoin XBT trading time is from 7:00 on Monday to 6:00 on Saturday, Beijing time; BCT trading time is from 7:00 on Monday to 4:15 on Saturday, Beijing time4. The position limit was 5000
Price circuit breaker mechanism: XBT price fluctuates more than 10% of the previous day's closing price, trading is suspended for 2 minutes, more than 20%, trading is suspended for 5 minutes; The BTC price fluctuates more than 7% or 13% of the closing price of the previous day, triggering the circuit breaker mechanism. The specific suspension time has not been disclosed. If it exceeds 20%, the trading will stop XBT requires 44% initial margin, which is about 2 times leverage; BTC Requires 35% of the initial margin, which is about 3 times the leverage. It is worth noting that both exchanges have indicated that the margin amount can be adjusted according to the actual situationhow to use leverage
1. Long (buy up)
here, take BTC / usdt leverage trading as an example (usdt vs. US dollar, 1 usdt = US dollar) to introce how to use bitcoin leverage. Assuming that the current price of bitcoin is US $10000, and you predict that the price will rise in the near future, you can choose to be long.
if you have only 10000 usdt principal and the platform is triple leverage, you can borrow another 20000 usdt from the trading platform, so the principal is now 30000 usdt; If it is 5 times leverage, it can borrow 40000 usdt, 10 times leverage is 90000 usdt... And so on
buy three bitcoins with 30000 usdt, sell them when they reach 20000 usdt, and get 60000 US dollars of bitcoin, dect 10000 principal and 20000 loan, and make a profit of 30000 US dollars
if you don't use leverage trading, you can only make a profit of 10000 usdt if you buy a bitcoin at 10000 usdt
of course, if the judgment is wrong, bitcoin will only lose 5000 usdt in currency trading and 15000 usdt in leverage trading
2. Short (buy down)
take BTC / usdt triple leverage trading as an example. At present, the price of bitcoin is 20000 usdt. If you think that the price of bitcoin will drop to 10000 usdt, and you have 10000 usdt in your hand, you can borrow one bitcoin from the platform (short can only borrow the currency you choose to short), and sell it when the price of bitcoin is 20000 usdt, Then, when the bitcoin price is 10000 usdt, buy it back to the platform, and you can make a profit of 10000 usdt
in fact, bitcoin leveraged trading plays a role in amplifying revenue, but it also magnifies risk
there are many digital currency trading platforms, and the main procts promoted by each platform are also different. Some are mainly spot trading, and some are futures trading. Among them, futures trading is contract trading, that is, leverage. The better platforms are coin stations, which can be seen by contract friends.
you can pry heavy things with less force
in financial investment, leverage is equivalent to magnification
a leverage of 5 means that you can do business for 500 yuan with 100 yuan principal.
leverage trading is also known as virtual trading and deposit trading. That is to say, investors use their own funds as guarantee to enlarge the financing provided by banks or brokers to carry out foreign exchange transactions, that is, to enlarge the trading funds of investors. The proportion of financing is generally decided by banks or brokers. The larger the proportion of financing is, the less capital customers need to pay
the international financing multiple or leverage ratio is between 20 times and 400 times, and the standard contract in the foreign exchange market is RMB 100000 per hand (which refers to the base currency, that is, the currency before the currency pair). If the leverage ratio provided by the broker is 20 times, it will cost RMB 5000 per hand (if the currency of the transaction is different from that of the account guarantee gold coin, It is necessary to convert the amount of deposit; If the leverage ratio is 100 times, a margin of 1000 yuan is required for the transaction. The reason why banks or brokers dare to provide a larger proportion of financing is that the daily average fluctuation of the foreign exchange market is very small, only about 1%, and the foreign exchange market is continuous trading. With perfect technical means, banks or brokers can completely use less margin of investors to resist market fluctuations without having to bear their own risks. Foreign exchange guarantee metal is used for spot trading, and has some characteristics of futures trading, such as trading contract and providing financing, but its position can be held for a long time until it is voluntarily or compulsorily closed
The leverage in foreign exchange is to add the borrowed money to the existing funds for investment. Leverage ratio, the ratio of assets to bank capital, and leverage effect in financial management are mainly as follows:
e to the existence of specific expenses such as fixed costs or fixed financial expenses, when one financial variable changes by a small margin, another related financial variable will change by a large margin. Reasonable use of leverage principle can help enterprises avoid risks and improve the efficiency of capital operation
extended data:
there are three forms of leverage effect in financial management, namely operating leverage, financial leverage and compound leverage
1. Operating leverage coefficient refers to the rule that the rate of change of profit is greater than the rate of change of proction and sales e to the existence of fixed costs
Financial leverage effect refers to the phenomenon that when one financial variable changes by a small margin, another related variable will change by a large margin e to the existence of fixed expensesrefers to the phenomenon that the rate of change of earnings per share of common stock is greater than the rate of change of profit before interest and tax when enterprises use debt financing methods, such as bank borrowing, issuing bonds and preferred shares
because the financial expenses such as interest expense and preferred stock dividend are fixed, when the profit before interest and tax increases, the fixed financial expenses borne by each common share will be relatively reced, which will bring additional benefits to investors
(3) the compound leverage coefficient is the multiple of the rate of change of profit per share of common stock equal to the rate of change of proction and salesexplanation:
the international financing multiple or leverage ratio is between 20 and 400 times. The standard contract in the foreign exchange market is RMB 100000 per hand (which refers to the base currency, that is, the currency before the currency pair). If the leverage ratio provided by the broker is 20 times, it needs RMB 5000 to buy and sell (if the currency of the transaction is different from that of the account guarantee gold coin, It is necessary to convert the amount of deposit; If the leverage ratio is 100 times, a margin of 1000 yuan is required for the transaction. The reason why banks or brokers dare to provide a larger proportion of financing is that the daily average fluctuation of the foreign exchange market is very small, only about 1%, and the foreign exchange market is continuous trading. With perfect technical means, banks or brokers can completely use less margin of investors to resist market fluctuations without having to bear their own risks. Foreign exchange guarantee metal is used for spot trading, and has some characteristics of futures trading, such as trading contract and providing financing, but its position can be held for a long time until it is voluntarily or compulsorily closed<
foreign exchange margin:
advantages:
foreign exchange margin is the freest, fairest and most advanced trading method in all financial markets in the world. Its advantages are as follows:
1. 24-hour trading
from Monday to Friday, 24-hour continuous trading every day, convenient for in and out at any time, avoiding the risk of next day short jump, Although there will be short jumps in the news regularly released within the day, it can be avoided by preset orders or short positions. 24-hour trading also gives office workers plenty of time to make investment profits. In particular, the active period of the foreign exchange market is relatively concentrated from 3pm to 11pm, which coincides with the domestic stock and futures markets in terms of time. It provides convenience for domestic office workers to engage in this most free "second occupation". If it is to make a medium and long-term order, it is even easier< The participants in the foreign exchange market include banks, central banks, financial institutions, import and export traders, investment departments of enterprises, fund companies and indivials. According to the statistics of the International Monetary Fund, the daily global trading volume is close to US $2 trillion. Therefore, as a global market, it is impossible for some people or institutions to manipulate it. First, it is convenient for technical analysis, and second, it is convenient for large capital in and out. In addition, the foreign exchange market is highly transparent, the market, data and news are open, and investors can obtain relevant information at the same time
3. Few trading varieties
the trading of foreign exchange market is concentrated in six kinds of currencies of seven countries or regions, namely euro / US dollar, pound / US dollar, Australian dollar / US dollar, US dollar / Japanese yen, US dollar / Swiss franc and US dollar / Canadian dollar. And the linkage of various varieties is strong, which makes it easy to concentrate on investment analysis
4. The risk can be flexibly controlled
because the daily average fluctuation of the foreign exchange market is about 1%, and the leverage ratio provided by brokers is usually 100 times, so the daily average risk return is between 1% - 100%, and the risk level can be flexibly controlled by yourself. Novices can start from 1% risk return, and graally increase the risk return ratio after entering a stable profit state. For example, if an investor opens an account with 1000 yuan, he will only trade 1000 yuan (1K) at the beginning of trading, which will control the risk at 1%. In addition, margin trading can be regarded as a firm offer
5. Two way transaction, flexible operation
you can buy before you sell, or you can sell before you buy, and the trading currency is not limited (this is an important difference from the firm offer). Of course, it is t 0, so you can repeatedly do short-term trading in the day. Limit order and stop loss order can be preset in order to keep profit and control loss
6. High leverage ratio
high leverage facilitates the flexible establishment of positions, but high leverage is a double-edged sword. For high-level investors, profits or floating profits can continue to use high leverage to increase positions on the premise of strictly controlling risks, which provides the possibility of realizing windfall profits
7. Low transaction cost
there is no commission for foreign exchange margin trading. The income of banks or brokers comes from the spread (the spread between buying and selling at the same time), which is generally 3-5 points (except for the dollar / yen 1 point is 0.01, the other varieties 1 point is 0.0001, that is to say, 1 in 10000). In addition, overnight positions, such as holding high interest currency, can enjoy interest; If you hold low interest currency, you need to pay interest. Generally speaking, the transaction cost is very low
8. The market entry threshold is low
to participate in foreign exchange margin trading, you can open an account through fax and network, and the proceres are simple. Various foreign exchange brokers have different regulations on the minimum amount of deposit account, most of which are between a few hundred dollars (mini account) and several thousand dollars (standard account). It can be said that the success of foreign exchange trading does not depend on the amount of funds, but on the level of operation. Small funds can grow rapidly, which provides another battlefield for the working class to realize their wealth dream
disadvantages
then, the disadvantages of foreign exchange margin trading:
are easy to lose, fast to lose and much to lose. You can earn 10000 in half a day and lose 10000 in half a day. In short, the risk is always proportional to the return
if you want to make money from the futures market, such as the foreign exchange market, you must first have sufficient and solid financial knowledge, coupled with proficient trading techniques, to make money from it
foreign exchange margin trading adopts leverage principle, and traders can make use of the characteristics of capital amplification to accumulate their wealth quickly through correct trading methods. This kind of trading mode of wealth amplification is being accepted by more and more foreign exchange investors.