What is Margin Trading?

1. Margin Trading

Margin tradingrefers to the act of customers pledging the securities in their account to Futu Securities and borrow more money from Futu Securities to buy shares. It can magnify the trading leverage, for example, using 2x leverage, the market value of assets increases by 50% when the stock price rises by 25%, and decreases by 50% when the stock price falls by 25%. Therefore it is recommended that clients using margin trading should have a strong risk tolerance.

2. Short Selling

Short selling occurs when an investor borrows a security and sells it on the open market, planning to buy it back later, a certain amount of funds can be used as a guarantee. Since the stocks sold by investors are borrowed from brokers, customers need to pay a certain amount of interest to the brokers.