Forced liquidation refers to the third party (futures market or futures brokerage enterprise) other than the position holder forcibly breaking the position of the position holder, also known as forced liquidation or cutting positions. Simply put, it is margin trading for futures. When the margin is not enough, it will be forcibly sold by the futures company, and the losses after the forced sale will be borne by the investors themselves. Generally speaking, when the position risk of futures is higher than 100% or the margin is lower than the minimum standard, investors need to add margin, and if they don't, they will be forced to close their positions.

Conditions for compulsory liquidation of futures:

First, the customer's trading margin is insufficient, which has exceeded the bottom line of risk control, and the market continues to develop in the direction of unfavorable positions. This is the basic premise for futures companies to implement compulsory liquidation in order to protect their own interests and prevent losses from expanding.

The second is to correctly fulfill the notification obligation of additional margin, which is a necessary procedure for futures companies to implement compulsory liquidation.

Third, the time and amount of additional margin should be reasonable.