Forced liquidation means liquidation. Forced liquidation refers to when the trading margin of a futures exchange member or customer is insufficient and is not replenished within the specified time, or when the position of a member or customer exceeds the regulation. When the limit is exceeded, or when members or customers violate regulations, the exchange implements forced liquidation in order to prevent further expansion of risks.

Measures to prevent forced liquidation and liquidation: Regarding the liquidation rules, when the advance payment ratio is less than or equal to 100%, the position will be liquidated. Therefore, the larger the number of the advance payment ratio, the safer it is. .

Extended information:

Analysis of reasons for liquidation:

1. Frequent heavy position operations

One of the characteristics of foreign exchange trading is high leverage , can even be as high as hundreds of times. If you choose high leverage operation and add a heavy position, although you may make more profits in the short term, by the same token, once you operate carelessly or encounter If you reach a relatively volatile market band, your position may be liquidated in a short period of time.

For this situation, it is generally caused by traders' eagerness for quick success. You can take small positions many times to spread the risk evenly, which can effectively avoid liquidation.

2. Obsession

Due to personal personality reasons, many traders fail to close their positions in time in dangerous moments. Instead, they take a lucky attitude and tend to favor the tiger, knowing that there is a tiger in the mountain. Mountain hike. This stubborn attitude is stupid in the foreign exchange market. Trading is nothing more than trying to make money in the foreign exchange market. If it doesn't work this time, you can wait until the next time. This is undoubtedly a waste of funds.

3. No stop loss

If you do not set a stop loss point before the transaction or do not strictly implement the stop loss operation during the transaction, there is a possibility of liquidation. This is also a common question, and its importance is self-evident. You can also combine stop loss with position management and use technical conditions to stop loss.

4. Frequent trading

Those who want to make a profit or win back losses If you think about it, if you see possible trading opportunities, you will act accordingly. In this way, the chance of encountering a crisis will be greatly increased, and the possibility of liquidation will also be increasing. Under normal circumstances, it is the wisest thing to resolutely exit the market after three failed transactions.

Baidu Encyclopedia - Liquidation

Baidu Encyclopedia - Liquidation