What is leverage that everyone often talks about?
You only have 10,000 yuan, which is too little. You want to trade 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 trade 100,000 yuan of stocks and Bitcoin. This is leverage, which is 10 times financial leverage. 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 trade stocks. If you are lucky, the stock goes up and you make money. The question is, how big is the risk in the middle? 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 take 100,000, and dare to make a profit of 100 million yuan. Getting rich overnight, is it exciting or cool?
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.
But what if you are unlucky and the stock price 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 and force you to sell your stocks. The broker will take back its own 90,000 yuan, which is a margin call. Your loss is yours, and the broker will not bear the loss.
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 hundreds of thousands of people around the world will be liquidated. This is the reason. That is why many people use several times or even dozens of times the leverage to speculate in stocks, and lose everything after the margin call. They lose their principal, owe the broker a large sum of money, and are heavily in debt. Finally, they have to jump off the building.
Again, if you don’t know what to do in a bull market, check out the introduction, bull market spot planning, contract password, free sharing.
