How to control the leverage ratio in gold trading?
How to control the leverage ratio in gold trading? At present, there are more and more customers who invest in gold. One obvious reason is that spot gold has leverage trading. When investors invest, they reduce their costs and enlarge their profits through leverage ratio. However, the leverage ratio will also affect the size of the transaction risk.
Leverage ratio is also called leverage ratio. When margin trading, investors use small amount of funds to invest several times of the original amount in order to obtain multiple returns relative to the fluctuation of the investment object. In the financial market, leverage ratio is the ratio of the actual value represented by the futures or options position to the cash paid to establish the position. The higher the leverage ratio is, the greater the profit or loss that can be brought about by the change of market price per unit, which means that the investment risk is higher. When the trend is favorable, there will be great gains, and when the trend is unfavorable, there is likely to be no return at all.
So, how to grasp the leverage ratio?
Low leverage ratio
If the leverage ratio is relatively small, for example, 1:50, when making investment, although the cost has been reduced, it has not been reduced much. For some investors, the cost still has a threshold. The leverage ratio is small, the market fluctuates a lot, but the leverage ratio is small. The profit of investors will be less, and if it continues, investors will lose interest in investing in the volatile market.
Large leverage ratio
Although too small leverage ratio will affect the profit of investment, but too high leverage ratio will also affect the profit of investors and threaten the cost. For example, the leverage ratio is 1:1000. The spot gold market fluctuates constantly, and the leverage ratio is very large. In this way, the return of investors will show polarization for many times, either serious losses or high profits, and there are too many uncontrollable factors.
Choose the right platform
Leverage ratio of 1:100 is more suitable, but the spot gold investment market is huge, it is inevitable that there will be some fraud platforms, which will use some low or even zero cost to cheat investors to open an account, and then steal investors' funds. Therefore, when we choose a platform with suitable leverage ratio, we also need to see whether the platform is a liar and whether it has legal capital qualification to make relevant investment.
[disclaimer] the publication of this article by finance managers for the purpose of transmitting more information does not mean that they agree with their views or confirm their descriptions. The content of this article is for reference only, and does not constitute an investment proposal. Investors operate on this basis at their own risk