The criteria for liquidating positions are those who opened their positions early, held large positions, suffered large losses and profits, and those who need to liquidate their positions, can liquidate their positions by agreement.

When a certain contract has continuous rising or falling limits, there is no way to exit the market at a loss. At this time, according to the trading rules of the exchange, if there are three consecutive rising or falling limits, the exchange will act as The intermediary will make an agreement to close the position. The rules for closing the position are that the criteria for closing the position are those that open the position early, hold a large number of positions, have a large loss and profit, and need to close the position. Of course, the hedging position will be protected and eventually closed by agreement.

In other words, those who make money will make so much, and those who lose money will lose so much. This method is used to resolve market risks.

Extended information:

Liquidation is a term derived from commodity futures trading, which refers to the process by which one party to the futures purchase or sale intends to offset the futures contract previously purchased or sold. transaction behavior. Position closing is a collective term for the behavior of long sellers selling the purchased stocks or short sellers buying back the sold stocks in stock transactions.

The whole process of futures trading can be summarized as opening a position, holding a position, closing a position or physical delivery. Building a position is also called opening a position, which means that a trader newly buys or sells a certain number of futures contracts.

Buying or selling a futures contract in the futures market is equivalent to signing a forward delivery contract. If a trader keeps this futures contract until the end of the last trading day, he must close the futures transaction through physical delivery or cash settlement.

However, only a small number of people carry out physical delivery. Most speculators and hedgers usually choose the opportunity to sell the futures contract they bought before the end of the last trading day, or sell the futures contract they sold. buy.

That is, a futures transaction of equal quantity and opposite direction is used to offset the original futures contract, thereby closing the futures transaction and releasing the obligation for physical delivery upon expiration.

This act of buying back a sold contract or selling a bought contract is called closing a position.

Close position refers to the behavior of futures investors buying or selling stock index futures contracts of the same variety, quantity and delivery month as the stock index futures contracts they hold but with opposite trading directions to close stock index futures transactions.

It can also be understood as: Position closing refers to the trading behavior of traders to close their positions, and the way of closing is to make opposite hedging transactions in the direction of the position.

Closing a position in futures trading is equivalent to selling in stock trading. Since futures trading has a two-way trading mechanism, corresponding to opening a position, there are two types of position closing: buying and closing (corresponding to selling and opening) and selling and closing (corresponding to buying and opening).

Hedging

Hedging and liquidation means that a futures investment enterprise buys and sells futures contracts of the same delivery month on the same futures exchange to settle previously sold or purchased positions. futures contracts.

Forced

Forced liquidation means that a third party other than the position holder (futures exchange or futures brokerage company) forcibly closes the position of the position holder, also known as being Liquidate or be liquidated.

There are many reasons for forced liquidation in futures trading, such as customers' failure to increase trading margin in time, violation of trading position limits and other irregularities, temporary changes in policies or trading rules, etc. In the regulated futures market, the most common force liquidation occurs due to insufficient customer trading margin.

Specifically, it refers to the situation where the trading margin required for the client's position is insufficient, and the client fails to promptly add the corresponding margin or actively reduce the position according to the notice of the futures company, and the market conditions are still unfavorable for the position. When the market direction develops, futures companies forcefully liquidate some or all of their customers' positions in order to avoid further losses and use the proceeds to fill the margin gap.