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What does liquidation mean? What does liquidation mean?
Liquidation refers to the futures contract trading behavior of one party in futures trading in order to cancel the futures contract bought or sold before. Opening a position, also known as opening a position, refers to the new purchase or sale of a certain number of futures contracts by traders. Buying and selling a futures contract in the futures market is equivalent to signing a forward delivery contract. If traders keep futures contracts until the end of the last trading day, they must settle futures transactions by physical delivery or cash settlement.

Only a few people make physical delivery, and most speculators and hedgers generally choose to sell their futures contracts or buy back their futures contracts before the end of the last trading day. That is to say, the original futures contract is written off by a futures transaction with the same amount and opposite direction, thus ending the futures transaction and relieving the obligation of physical delivery at maturity. This behavior of buying back a sold contract or selling a bought contract is called liquidation.

Closing a position in futures trading is equivalent to selling in stock trading. Because futures trading has a two-way trading mechanism, there are two kinds of buying and selling corresponding to opening and closing positions.

For example, an investor opened his position in 65438+February 15, and bought 10 futures in 65438+ 10, with a transaction price of 1400 points. At this time, he has a long position of 10. By 65438+February 17, investors saw that the futures price had gone up, so they sold six lots of 65438+ 10/0 stock index futures at the price of15. After the transaction, the actual position of the investor is only 4 lots. If the investor sells six open contracts of 65438+ 10 month stock index futures at the time of declaration, after the transaction, the actual position of the investor is not the original four hands, but the long position of 10 hand and the short position of 6 hands.

Forced liquidation refers to the forced liquidation of the position of the holder by a third person other than the holder, also known as being cut or cut.

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, temporary changes in policies or trading rules, etc. In the standardized futures market, it is most common that customers are forced to close their positions because of insufficient trading margin.