Short position, also known as forced liquidation, refers to the forced liquidation carried out by the exchange to prevent further risk expansion when the customer's trading margin is insufficient and not replenished within the specified time, or when the customer's position exceeds the specified limit.
Under what circumstances, there is a clear calculation formula. For example, when the net value in the account is less than 20% of the used margin, the system will force the liquidation. An investor's account capital is $654.38+10,000, and he buys five lots of gold at the price of $ 1.230, so the calculation formula of the price at which he will explode is (for the convenience of calculation, the handling fee generated in the operation is omitted below):
Margin used: 5 lots * 1000 USD/lot = 5,000 USD.
Shortage point: 5000 USD *20%= 1000 USD, that is to say, when there is only 1000 USD left in the account, the system will force liquidation.
Lossable funds:100000-1000 = $99000;
Difference corresponding to loss: 99,000 ÷ 500 =198 USD;
Solution:1230-198 =1032 USD.
Then when the price dropped to 1032, the account exploded.
Most short positions are related to improper fund management. In order to avoid this situation, it is necessary to control positions in particular, manage funds reasonably, and avoid possible Man Cang operations in stock trading.
General prevention methods of warehouse explosion;
1, light warehouse operation, each time 20%-30% of the funds in the account are used for trading, and the stable market should not exceed 50% of the funds in the account.
2. Stop loss must be strictly set. If you make a profit, you can't run. If you lose, you will fight, so that sooner or later, once you can't fight back, you will be short.
3. Make a clear trading plan, don't buy and sell just by feeling, you need to summarize and analyze the news and technical aspects to give an accurate market judgment.
Investing is like doing business. You can make money if you manage it well, but you will lose if you manage it badly!