The difference between liquidation and liquidation in the currency circle

Liquidation in the currency circle refers to forced liquidation of positions due to losses reaching margin requirements, which may lead to serious losses or even liabilities. Position closing is an operation to actively close a trading position, which can achieve profits and losses but will not cause additional losses.

The difference between liquidation and liquidation in the currency circle

Question: What is the difference between liquidation and liquidation in the currency circle?

Answer: Liquidation and liquidation are two completely different operations in currency trading. The main differences are as follows:

1. Liquidation

• Definition: Liquidation means that the trader is In margin trading, when the account loss reaches or exceeds the margin requirement, the transaction is forced to be closed and additional losses are incurred.
• Cause: Liquidation is usually caused by large market fluctuations or overweight positions.
• Consequences: Liquidation will lead to serious losses in the account, and may even lead to debt.

2. Position closing

• Definition: Closing a position refers to the operation of a trader to actively close a trading position.
• Purpose: Closing a position can be used to take profit or stop loss.
• Impact: Closing a position may cause traders to realize profits and losses, but will not incur additional losses.

Other differences:

• Initiative: Liquidation is a passive forced liquidation, while liquidation is an active operation.
• Profit and loss: Liquidating a position usually results in a loss, while closing a position can achieve a profit or loss.
• Margin Requirements: Liquidation usually occurs in margin trading, while liquidation is not subject to margin requirements.
• Risk: The risk of liquidation is much higher than the risk of liquidation because it can lead to significant losses.

Suggestions to avoid liquidation:

• Reasonably control the position
• Reserve enough margin
• Stop loss and profit in time
• Use limit order instead of market order

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