Recently, many people are interested in stock and foreign exchange trading, but do not know the risk of liquidation. Liquidation in stocks means that the loss is greater than the margin, and liquidation in foreign exchange refers to the situation where the account funds are negative. Liquidation was originally used in stocks, but was later used in foreign exchange. The nature of the two is the same. The following will explain to you what it means to sell out in stocks and foreign exchange? How to understand.

What is the meaning of liquidation in stocks and foreign exchange

Why does liquidation in stocks and foreign exchange happen?

Stock liquidation

Liquidation means that the loss is greater than the margin in the account, not that the stock money is gone. After the company is forced to liquidate, the remaining funds are the total funds minus the losses, and there is generally a portion left.

  1. The financing is the most, and the result continues to fall. The leverage in the futures is used, and the position is forced to liquidate, which is a liquidation. Speaking of liquidation, we have to mention liquidation. Many funded customers do not like to take proactive measures after their accounts are warned, such as reducing their positions and clearing them by themselves. They are often direct hard resistance. In fact, this is very irrational.
  2. There are regulations for capital cooperation. If you take the initiative to lighten your position after the warning to avoid risks, then you only need to make up the margin above the warning line to lift the trading restrictions, and if you blindly resist, you will be liquidated by the company. If you have a position, then you need to make up the margin to the original fund to re-open the authority.
  3. Liquidation refers to the situation where the customer’s equity in the investor’s margin account is negative under certain special conditions. Liquidation means that the loss is greater than the margin in your account. After the company is forced to liquidate, the remaining funds are the total funds minus your losses, and there is generally a part left.

Forex liquidation

The liquidation of foreign exchange trading refers to the situation where the customer’s equity in the investor’s margin account is negative under certain special conditions. When the market changes greatly, if most of the funds in the investor’s margin account are occupied by trading margin, and the trading direction is opposite to the market trend, due to the leverage effect of margin trading, it is easy to liquidate. If the liquidation results in a shortfall and is caused by the investor, the investor needs to make up the shortfall, otherwise he will face legal recourse.

When a liquidation occurs, investors need to make up for the shortfall, otherwise they will face legal recourse. In order to avoid this situation, you need to control your positions in particular, and avoid full positions like stock trading. And to track the market in time, you can’t buy it like stock trading.

No matter in foreign exchange, futures or stock markets, liquidation should be avoided.

Liquidation occurs mostly because investors are overconfident and think they can succeed. As everyone knows, the success of investment requires a clear view of the situation before starting. Good financiers should develop a long-term strategic vision, and don’t care about temporary gains.

There are many situations in which a liquidation occurs. One is that investors pay too much attention to interests, which leads to irritable operations. If they start trading without a comprehensive understanding of the situation, they will encounter great risks. The second is that investors did not stop the loss in time and still traded when they saw that there was a trading risk. They believed that they had to be in danger to gain wealth, which resulted in failure and liquidation. The third is that investors ignore the setting to stop trading after a loss and allow the platform to conduct investment transactions. The fourth is that investors trade without careful consideration, thinking they have luck to come back.

How traders deal with liquidation in stocks and foreign exchange

Investors should judge whether they can invest to deal with liquidation based on risk. Investors can make a small investment each time, divide the possible risks into smaller pieces, and stop trading if they lose money many times. Investors should not have the survivor’s bias when investing, and they must trade according to the actual situation. Investors can set the point of loss to stop trading to avoid repeated losses. The number of transactions of investors can be appropriately reduced. Excessive transactions will only make people addicted. If they fail, they will not be reconciled. Thinking of doing it again is very dangerous. Investors should refer to the advice given by professional financial professionals to conduct reasonable transactions.

The above introduces the reasons for liquidation in stocks and foreign exchange, and how to deal with the risk of liquidation in stocks and foreign exchange. Everyone should understand what is meant by liquidation in stocks and foreign exchange? How to understand. Both stocks and foreign exchange are investments with a certain degree of risk. Investors should seek advantages and avoid disadvantages, invest their funds in a hurry, and should learn more about the situation before trading. I believe the introduction here can give novice investors a certain understanding of liquidation in stocks and foreign exchange, and I hope this introduction can help skilled investors learn to avoid the risks of trading.