Liquidation refers to the situation where the customer's equity in the investor's margin account becomes negative under certain special conditions. At this time, the loss is greater than the margin in the account.

When a liquidation occurs, investors need to make up their shortfalls, otherwise they will face legal recourse. In order to avoid this situation from happening, it is necessary to control the position carefully and avoid operating with a full position like stock trading. And the market trends should be tracked in a timely manner, and you cannot buy them all at once like stock trading.

Due to the rapid changes in the market, when investors have no time to add margin, the margin on their accounts can no longer maintain the original contract. This kind of margin caused by forced liquidation due to insufficient margin "Return to zero" is commonly known as "liquidation", and "full position" has the same meaning as "liquidation".

There are two situations of liquidation. One situation means that after the futures customer closes the position, he still owes the futures exchange money, that is, the account floating profit and loss ≥ the total account funds, that is, the customer’s equity ≤ 0 . Another situation of liquidation: liquidation caused by heavy positioning operations is relatively common. Heavy positioning operations, such as position ratio reaching more than 90%, will result in less unoccupied funds and less room to resist reverse changes.

Reasons for liquidation:

1. Frequent heavy position operations: One of the characteristics of foreign exchange trading is high leverage, which can even be as high as hundreds of times. If you choose high-leverage operation and join a heavy position, you may earn more profits in the short term. However, by the same token, once you operate carelessly or encounter a relatively volatile market band, you may also lose money. The position may be liquidated in a short period of time.

2. Obsession: Due to personal personality reasons, many traders fail to close their positions in time in dangerous moments, but take a lucky attitude and go for the tiger in the mountain, knowing that there is a tiger in the mountain.

3. No stop loss: If the stop loss point is not set before the transaction or the stop loss operation is not strictly executed during the transaction, there is a possibility of liquidation.

4. Frequent trading: With the idea of ????wanting to make a profit or to win back a loss, you will act casually when there are possible trading opportunities. This will greatly increase the chance of encountering a crisis and the possibility of liquidation. Sex has also been increasing.