What does liquidation mean?

Liquidation refers to the situation when investors are unable to continue to hold positions and meet the required margin requirements due to violent price fluctuations or accumulation of losses during leveraged trading or borrowing transactions. The exchange or In order to ensure that investors would not suffer further losses, trading companies were forced to liquidate their positions. Measures to avoid liquidation: 1. Control leverage; 2. Do a good job in risk management; 3. Fully understand the market; 4. Stay calm; 5. Avoid excessive trading; 6. Regular reviews.

Liquidation refers to the situation in which investors are unable to continue to hold positions due to violent price fluctuations or accumulation of losses during margin trading or borrowing transactions and are unable to satisfy their needs. When the required margin is required, the exchange or trading company is forced to close the position in order to ensure that investors will not suffer further losses.

For example, if you buy a stock, you are forced to sell it even though you clearly did not sell it! There are two conditions required for liquidation to occur. One is that the funds used to purchase securities products are not all investors' own funds. Some of them are borrowed. This part of the own funds is also called margin; One is that the account suffers a loss and the loss is greater than the available margin.

To avoid liquidation, investors can take the following measures:

1. Control leverage: Try to use low leverage in transactions to avoid excessive leverage.

2. Do a good job in risk management: set stop losses, stop losses in time, control the extent of losses, and avoid continuous expansion of losses.

3. Fully understand the market: Understand the trading rules, risk characteristics and technical analysis methods of relevant markets, and improve your trading level.

4. Keep calm: Stay calm during trading and avoid blindly following the trend and over-trading.

5. Avoid excessive trading: Reasonably control the number and frequency of transactions to avoid excessive trading that leads to capital pressure and risk accumulation.

6. Regular review: Regularly review your own trading records and risk management strategies, and make timely adjustments and improvements.

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