Liquidation is a term derived from commodity futures trading, which refers to the trading behavior in which one party offsets the futures contract previously bought or sold. Closing a position is a general term for selling stocks bought by bulls or buying back stocks sold by bears in stock trading.
What is the process of futures trading?
The process of futures trading is divided into opening position, holding position, closing position or delivery. First, select futures varieties for trading, and then open or close a certain number of contracts. At this time, it is equivalent to signing a forward delivery contract for this commodity and then holding the contract. If the investor holds this contract until the delivery date, it can make physical delivery after the remaining funds are settled. However, the futures market rarely carries out physical delivery, and investors will choose to close their positions before the delivery date, that is, close their positions, and the complete transaction of a futures contract will be completed after closing their positions. In addition, if some investors continue to be bullish or bearish on the market of a certain variety, they can move their positions before the delivery date expires to achieve the purpose of continuing to hold positions.