Margin trading, also known as securities credit trading or margin trading, refers to the behavior that investors provide collateral to securities companies with margin trading qualifications, borrow funds to buy securities (margin trading) or borrow securities and sell them (margin trading), which is a common leverage tool in the capital market.
Simply put, financing means that investors pay a certain margin when they are optimistic about the market, buy stocks with funds borrowed from brokers, and then sell them after the stock price rises. After paying off the borrowed funds and interest, what remains is the investor's profit. Securities lending means that when investors are bearish on the market, they pay a deposit to borrow shares from brokers and sell them, and then buy back the same amount of shares at a low price after the stock falls. Earn profits after paying off the borrowed stocks and interest.
This small and wide investment method has a certain leverage effect, which will amplify the profit and loss at the same time. If you want to make a profit, you must build on the basis of accurately forecasting market conditions. The more financing buys, the higher the investment cost, and the correlation coefficient between its income loss and the stock market index increases exponentially, so it is necessary to operate cautiously.