Advantages and disadvantages of foreign exchange margin trad
Foreign exchange margin does not have advantages and disadvantages. In many cases, the advantages are shortcomings. The disadvantages are advantages. Seeing that you stand from that perspective: The following understanding of foreign exchange margin comes from the concept of most people.
First, we look at the advantages:
1, low capital, generally less than the actual investment of 10%;
2, two-way trading investment, both ups and downs have profit opportunities;
3, the possibility of profit is high, sometimes one day More than double the profit;
4. Risk controllability, preset limit price and stop loss point (this depends on the investor's experience and trading ability);
5, 24 hours trading , at any time;
6, low handling fee, low transaction costs;
7, the global daily trading volume of more than 1.9 trillion US dollars, not easy to fall into the man-made manipulation;
8, high information transparency, all the market, data and news are public.
Foreign exchange 24-hour trading, because it is a derivative transaction, the margin trading is a derivative transaction, so the profit is fast, of course, the loss is also fast.
Second, look at the shortcomings:
In fact, it is the advantage, the operation mode of the margin, if the investor does not control his position and funds, the trading risk will make you lose money at any time.
This large loss is mainly due to investors' problems in the following aspects:
The higher the leverage ratio, the higher the risk;
Subjective emotional, maximizing profits, guessing the bottom;
No funds control, full warehouse admission;
lack of basic analysis ability, blindly follow the trend.
In fact, the first requirement for investing in foreign exchange margin is to carefully select traders, because the choice of traders directly affects the transaction costs and security of investors.