Liquidation is a term derived from commodity futures trading, which refers to the trading behavior of one party in futures trading to cancel the futures contract bought or sold before. In commodity futures trading, the combination analysis of price, volume and position is considered as an important index to predict the price trend.
However, all short selling must eventually be leveled by actually buying stocks, so huge short selling is considered as a sign of stock price rise, which is theoretically called "air cushion theory".
Extended data:
Classification of liquidation: Liquidation can be divided into hedging liquidation and compulsory liquidation.
1. Hedging liquidation refers to the liquidation of futures contracts previously sold or bought by futures investment enterprises by buying on the same futures exchange and selling futures contracts in the same delivery month. The so-called forced liquidation refers to the forced liquidation of the position of the holder by a third party other than the holder (futures exchange or futures brokerage company, such as the trading platform of Fuhui Global Gold Exchange), also known as liquidation or liquidation.
2. There are many reasons for compulsory liquidation in futures trading, such as customers' failure to add trading margin in time, violation of trading position restrictions and other irregularities, and temporary changes in policies or trading rules.
3. In the standardized futures market, the most common is forced liquidation due to insufficient trading margin of customers. Specifically, it refers to the customer's insufficient trading margin required to hold a position contract, and fails to add the corresponding margin in time or take the initiative to lighten the position according to the notice of the futures company.
And the market is still developing in the direction of unfavorable positions. In order to avoid the expansion of losses, futures companies forcibly close some or all positions of customers and fill the margin gap with the funds obtained.
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