Explosion generally refers to forced liquidation. Forced liquidation is also called forced liquidation, which is also called being cut, cut and exploded.
The compulsory liquidation system is a risk management system that cooperates with the position limit system and the price limit system. When the trading margin of exchange members or customers is insufficient and not replenished within the specified time, or when the positions of members or customers exceed the specified limit, or when members or customers violate the rules, the exchange will forcibly close the open positions held by them in order to prevent the risk from further expanding. This is the compulsory closing system.
Two situations of warehouse explosion:
1, one case is through warehouse. Refers to the futures customers who still owe money to the futures exchange after liquidation, that is, the floating profit and loss of the account is ≥ the total amount of funds in the account, that is, the customer's equity is ≤0.
Due to the rapid changes in the market, the deposit in the account can no longer maintain the original contract before the investor adds the deposit. This kind of margin "zeroing" caused by forced liquidation due to insufficient margin is commonly known as "short position", and the meaning of "short position" is the same as "short position".
2. The explosion caused by heavy positions is more common. For example, if the proportion of positions reaches more than 90%, it will occupy less funds and have less room to resist reverse changes. Heavy warehouse operation is a way of small profits but quick turnover.
Because of the reverse change, if the margin is insufficient, you will explode. This is a software system that will automatically prevent you from closing your position. An empty position means that the loss is greater than the deposit in your account. After the company is forced to draw a tie, the remaining funds are the total funds MINUS your losses, and generally there will be a part left.