Before placing a trade, it is crucial to understand the platform's liquidation mechanism. This article will explain the forced liquidation rules of the GAIN FOREX platform in detail, so that you can have a clear understanding of this.
Forex.com Forced Liquidation Mechanism:
Trading on the FOREX platform, the mechanism of forced liquidation is executed when the margin ratio is equal to or less than 100%. The margin ratio actually refers to the ratio of the account equity to the margin used. When the available margin is equal to 0, FOREX's forced liquidation mechanism will be executed.
For example, if your equity is $2,000 and you currently hold a long position in Europe and the United States, occupying $100 of margin, then the available margin is $1,900, and the margin ratio is 2,000 (equity) 100 (used margin) = 2,000%. When ** becomes unfavorable, the available margin loss reaches 0, the net value becomes $100, and the margin ratio becomes 100%, and the system will force the position to be closed**.
Forced liquidation of FOREX.com product delivery:
When trading** products on the FOREX platform, the products that are not closed at maturity will be forced to close by the system. Taking US as an example, if you hold a US crude oil December contract and the position is not closed until the delivery date, the system will directly force the contract to be closed on the same day. If you need to re-open a position**, you need to wait for the new contract to go live and place a new order.
The scene of forced liquidation of FOREX:
Investors may wonder if the remaining funds are the amount of free margin when the order is liquidatedThis is not the case. If there is a negative slippage that causes the order to be liquidated at a worse price, the remaining funds in the account will be less than the free margin of the original position;If there is a positive slippage and the order is liquidated at a better price, the remaining funds in the account will be more than the free margin of the original positionIn the event of a gap, the account's free margin may be reduced to zero or even a negative balance.
The above is a detailed answer to the forced liquidation rules of FOREX. If you want to know the order of forced liquidation in MT4, you can refer to the article "When will FOREXCOM be forced to liquidate" on our official website.