When investing in stocks, I often hear various words such as closing positions and opening positions, but I can't tell what they mean and what's the difference. So let's take a look.

What does liquidation mean?

The difference between liquidation and clearance is that liquidation is forced to sell all the stocks in the account, while clearance is that investors take the initiative to sell all the stocks at once. However, the meaning of liquidation and clearance is the same, which means that individuals or institutions sell all tradable varieties such as stocks, bonds and futures in their accounts.

In the stock market, forced liquidation usually occurs in the margin trading and securities lending business. Because the investor maintains the guarantee ratio below 130% and there is no additional collateral, it is forced to sell by the securities company. After the sale, the funds will be transferred to the credit account of the securities company. If the investor still owes money to the securities company after the liquidation, the securities company will pursue debt collection.