There are many reasons for compulsory liquidation in futures trading, including customers' failure to add trading margin in time, violation of trading position restrictions and other irregularities, temporary changes in policies or trading rules, etc. In the standardized futures market, the most common phenomenon is forced liquidation due to insufficient trading margin of customers, that is, when the position margin required by the customer's position contract is insufficient, and the customer fails to add the corresponding margin in time or take the initiative to reduce the position according to the notice of the futures company, and the market situation is still developing in the direction of unfavorable positions, the futures company forcibly closes part or all of the customer's positions to fill the margin gap, so as to avoid the risk spread caused by the expansion of losses. Most investors in the stock market can't understand that futures companies have to close their positions without customers' consent, because the leverage of futures is not clear.

The so-called forced liquidation refers to the forced liquidation of the position of the holder by a third person other than the holder (such as a futures exchange or futures company), which is also called forced liquidation or position cutting.