Forced liquidation is also called forced liquidation, and it is also called being cut/cut/exploded. According to the different subjects of compulsory liquidation, compulsory liquidation can be divided into exchange compulsory liquidation and brokerage compulsory liquidation. Commonly used in spot gold and futures trading.

For example, you initially buy 100 lots of soybeans, with a profit margin of 10% and a position of 300,000 yuan. Now, due to the drastic changes in the market, the exchange has increased the margin ratio to 15%, and your 300,000 funds can only maintain 80 positions, so either you add more funds to maintain your 100 positions.

Extended data:

job operation

When the balance of the settlement reserve fund of a member is less than zero, there are three kinds of compulsory liquidation that are not replenished within the specified time:

First, when only the proprietary account defaults, the proprietary account shall be closed in the order of the total contract positions. If the settlement reserve is still less than zero after the forced liquidation, the investors in their agency accounts will be moved;

Second, when only the brokerage account defaults, it will be compensated by the balance of settlement reserve and the liquidation amount of the self-operated account, and then the position in the brokerage account will be leveled according to certain principles;

Third, when both the proprietary account and the brokerage account default, the order of forced liquidation is proprietary account first, then brokerage account. If the settlement reserve is greater than zero after forcibly closing the brokerage account position, investors will be passive.

Forced liquidation when the position exceeds the position limit: when this happens to only one member, close the position in the self-operated account first, and then close the position in the brokerage account. The positions held in the brokerage account shall be determined according to the ratio of the number of members who exceed the positions to the positions held by members.

When there are multiple members in this situation, members with a large number of backlogs are preferred as the object of forced liquidation. Investors overstock, forcibly liquidate their positions;

If an investor holds positions in multiple members, the member shall be selected for compulsory liquidation according to the order of the number of positions from large to small. If both members and investors exceed positions at the same time, the investors who exceed positions shall be closed first, and then the positions shall be closed according to the method of members exceeding positions.

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