What is leverage that everyone often talks about?
You only have 10,000 yuan, which is too little. You want to invest in stocks and Bitcoin, but it is not enough. What should you do? Don't worry, I am a brokerage, I will lend you 90,000 yuan. You use 10,000 yuan of principal to invest in 100,000 yuan of stocks and Bitcoin. This is leverage, which is 10 times financial leverage.
So why does the brokerage lend you 90,000 yuan? Is the brokerage a philanthropist? Of course not. The brokerage lends you money with requirements.
You have 10,000 yuan of principal, and you use the 90,000 yuan borrowed from the brokerage, a total of 100,000 yuan, to invest in stocks. If you are lucky, the stock will rise, and you will make money.
The question is, have you ever thought about how big the risk is?
You use 10,000 yuan of principal to make a profit of 100,000 yuan. 100,000 plus leverage, make a profit of 1 million yuan. 1 million plus leverage again, make a profit of 10 million yuan. The brokerage gives you 100 times leverage, you dare to make a profit of 100 million yuan with 100,000 yuan. Get rich overnight. Is it exciting or not? Human greed is an endless bottomless pit.
Someone took 100,000 yuan, added 1,000 times leverage, and made 100 million yuan in the stock market in 4 days. This is not nonsense. This is a real case. Get rich overnight! !
If you make money, you will share some of the broker's profits.
But what if your stock money falls? From 100,000 yuan to 90,000 yuan, the broker will ask you to cover your position and make up your 10,000 yuan principal. If you don't cover your position, the broker will force you to close your position, force your stocks to be sold, and the broker will take back its own 90,000 yuan, which is a margin call. Your loss is yours, and the broker does not bear the loss.
Then you say, don't worry, it will go back tomorrow, wait a little longer. Sorry, the broker will not wait, and force you to close your position immediately. Even if the broker sells too late, the 90,000 yuan principal is not enough, and you have to bear the broker's losses.
So we often see in the news that when a certain stock falls, Bitcoin only falls by a few thousand dollars, and tens of thousands or even hundreds of thousands of people around the world are liquidated.
This is the reason why many people add several times or even dozens of times leverage to stocks, and lose everything after the liquidation. They lose their principal and owe a large sum of money to the brokerage firm, and are heavily in debt, and finally have to jump off the building.
Human greed is endless!