Short position refers to the situation that the customer's rights and interests in the investor's margin account are negative under some special circumstances. A short position means that the loss is greater than the margin in your account. After the company is forced to draw, the remaining funds are the total funds MINUS the losses, and generally there will be a part left.
Because the stock price is changeable, when the stock price falls below the cost price of the loan unit, it is agreed to protect the capital of the loan unit, and the loan unit can forcibly sell the pledged stock at the market price. This is called forced liquidation. For the pledge lender, it is equivalent to the confiscation of the pledge and the loss of its shareholding position, commonly known as the explosion of positions.
Extended data:
Explosion can be mainly divided into the following two situations:
1. Futures customers still owe money to the futures exchange after closing their positions, that is, the floating profit and loss of the account ≥ the total amount of funds in the account, that is, the customer's equity ≤0. Due to the rapid changes in the market, the deposit in the account can no longer maintain the original contract before investors have time to add the deposit. This kind of margin caused by forced liquidation due to insufficient margin is "zero", commonly known as "short position".
Second, the explosion caused by heavy positions is more common. Take heavy positions as an example. If the proportion of positions reaches more than 90%, there will be less unused funds and 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, it will explode. This is the automatic stop loss liquidation of the software system.
References:
Baidu encyclopedia-baocang