The concept of stock
What is a stock? A stock is a general term used to describe the ownership certificate of any company. A stock, on the other hand, refers to the stock certificate of a particular company. Holding a particular company’s share makes you a shareholder.Stock is also a kind of negotiable securities because it contains economic benefits and can be listed, circulated and transferred.
There are three uses for stocks. One is as a proof of capital contribution, when a natural or legal person invests in shares in a joint stock limited company, it can obtain stocks as proof of capital contribution; the second is that the holder of the stock can rely on the stock to prove his identity as a shareholder. To participate in the shareholders' meeting of the joint-stock company and express opinions on the operation of the joint-stock company; the third is that the holder of the stock can obtain certain economic benefits by the stock, and participate in the profit distribution of the joint-stock company, that is commonly referred to as dividends.
In general, the following should be included in a stock contract:
The stock contract generally refers to the stock futures transaction, the stock contract transaction and the stock transaction are different. The biggest difference is that the stock is calculated according to the actual profit and loss, that is to say, it needs to be paid in full before trading; while the profit or loss of the stock CFDs is calculated on the basis of leverage, as long as the margin is paid.
There are many kinds of leverage in stock contracts, such as 5 times, 10 times, and 20 times. For example, if you buy a stock at $10 and drop to $9, you actually lose $1 per share. Stock CFDs, on the other hand, can be bought up or down. In other words, if you sell the stock short at $10, if the stock falls by $1, you can earn as much as $20 per share (at 20 times leverage). Of course, if the trade is misjudged, leverage also represents an increase in losses.
In fact, in order to control the risk of CFDs and curb excessive speculation, financial authorities in various countries require brokers or banks must have a 100% margin, that is, no matter how the client pays the margin. For a customer's transaction, the broker or bank must have 100% of the amount of money as a guarantee, for example, the broker provides the client with a margin of 5%. That means that customers only need to pay 500 yuan to make 10,000 yuan in transactions. But for a bank or broker, it must have $10,000 available for trading. This means that only powerful brokers can offer CFDs.
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