What does London gold mean? What is the compulsory liquidation of London gold? I believe that investors who are not familiar with technical terms will be very confused about this, so what does this mean? The following is for you from Bian Xiao. I hope I can help you.
What is the compulsory liquidation of London gold trading?
Loco London gold, also known as spot gold, is named after its origin in London. London gold trading is the most traded gold investment method in the financial market at present. At present, large foreign exchange trading platforms such as FXCM provide London gold trading for traders. On the platform of FXCM, London gold, like other foreign exchange trading products, can also use leverage. Next, the mandatory liquidation rules of London gold on FXCM MT4 platform are introduced in detail.
Foreign exchange traders know that when trading on MT4 trading platform, there will be a prepayment ratio value in the trading box. The rule of compulsory liquidation of London gold trading is that when the advance payment ratio of the trader is lower than 100%, the trader will be forced to liquidate. So how is this prepayment ratio calculated? The calculation formula of advance payment ratio is: net value/used advance payment x 100%.
Traders should pay attention to the fact that not all foreign exchange platforms have the mandatory liquidation rules of Loco London gold, and the margin ratio is 100%. Different platforms may be different. Traders need to consult the customer service of the foreign exchange platform where the account is opened for confirmation. If traders want to avoid forced liquidation when trading Loco-London gold, they can start from two aspects: one is to avoid heavy trading as much as possible, and the other is to add margin, that is, to add more gold. Through these two methods, you can effectively avoid the explosion of your account margin ratio reaching 100%.
What is compulsory liquidation?
Forced liquidation means that when the trading margin of members or customers of a futures exchange is insufficient and not replenished within the specified time, or when the positions of members or customers exceed the specified limit, or when members or customers violate the rules, the exchange implements forced liquidation to prevent the risk from further expanding. The compulsory liquidation system is a risk management system that cooperates with the position limit system and the price limit system. When the trading margin of exchange members or customers is insufficient and not replenished within the specified time, or when the positions of members or customers exceed the specified limit, or when members or customers violate the rules, the exchange will forcibly close the open positions held by them in order to prevent the risk from further expanding. This is the compulsory closing system.
Definition of compulsory liquidation
The compulsory liquidation system is a risk management system that cooperates with the position limit system and the price limit system. When the trading margin of exchange members or customers is insufficient and not replenished within the specified time, or when the positions of members or customers exceed the specified limit, or when members or customers violate the rules, the exchange will forcibly close the open positions held by them in order to prevent the risk from further expanding. This is the compulsory closing system.