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Simply put, if your futures position goes through three daily limit boards or daily limit boards in a row, you can force the liquidation under certain conditions.
The main purpose of "three strong boards" is to protect investors from discontinuous losses under extreme market conditions, and there is an exit mechanism.
The rule of "three strong boards": if the opening fails in the last five minutes, customers with three consecutive unilateral boards will close the market on the fourth day, hang up the order on the third day, and find the most profitable hedge with you on the fourth day, thus reducing the position of futures contracts. After three consecutive daily limit, you can close the short position at the daily limit price. If there is no deal on that day, as long as you pay the closing price at the third daily limit, the exchange will be responsible for finding the most profitable long position for you and clearing the position for you at the daily limit price.
After three consecutive daily limit, bulls can close their positions by hanging the daily limit. If they don't make a deal that day, as long as you hang the closing order on the third daily limit, the exchange will be responsible for finding the most profitable short position for you and clearing the position at the daily limit price.
There are many reasons for the forced liquidation in futures trading, including the customer's failure to add the trading margin in time, and the proportional relationship between the strong margin and the position margin changes with the exchange margin ratio. Because the current judicial interpretation stipulates the principle of comparison, and the agreement of the parties in the futures brokerage contract is not comprehensive and inconsistent, how to determine the applicable conditions and consequences of forced liquidation in judicial practice is not uniform.
Solution:
1, self-investment to mitigate risks
Due to the improvement of the level of temporary deposit, the deposit is insufficient. If you don't want to change the trading plan, it is recommended to save money in time or move your position yourself. For example, for a long vacation or a single contract, the margin is increased due to too many positions.
In the extreme market fluctuation, futures companies often face large-scale customers in the state of additional margin. If the market goes up and down, in order to prevent the next trading day from going up and down continuously, futures companies will often be forced to hang a strong flat order in call auction before the market opens. At this time, forced pricing is mostly unfavorable to customers. At this time, it is recommended to make a deposit in time, and then deal with it according to market fluctuations.
2. Automatic liquidation
If the market fluctuates greatly due to approaching time or unexpected events or abnormal fluctuations in the surrounding market, it is recommended to close the position on its own. Because in these cases, the risk of insufficient margin is often difficult to resolve in the short term. However, the pressure in the waiting process often makes customers make irrational choices, and self-lightening is a better solution.