What does stock liquidation mean? What are the reasons for stock liquidation?

In my opinion, stock liquidation should refer to stock capital liquidation, because there is a lock-up in stock trading, but there is no liquidation.

Let’s take a look at what stock allocation liquidation is:

Once you allocate funds, it proves that your account is leveraged, and the risk is magnified many times. Often when the market goes unfavorably or the individual stocks purchased experience extreme losses, the position will be liquidated instantly. To put it simply, you originally only had 100,000 yuan, but you felt that it was not enough. According to the form of loan interest payment, you found a financing company, and transferred the money to the designated account of the financing company at a ratio of 1:5, and allocated it to 500,000 yuan. , after doing this, your risk and return will be magnified by 5 times. If you buy a full stock of stocks and the target you buy rises sharply, you will double it instantly. However, if the stock encounters extreme market conditions, , you will lose 100,000 if you drop the limit, and you will lose all your principal of 100,000 if you drop the limit twice. If you don’t add funds, the financing company will force you to liquidate, and in the words of the industry, your position will be liquidated.

In order for everyone to understand, let me give you an example. If the friend of the question has 100,000 yuan, even if the capital is allocated according to 1:3 to 300,000, the first limit will be lowered, and 300,000 yuan will only be 27 Thousands, the second lower limit, only 27*0.9=243,000, the third lower limit is 24.3*0.9=218,700, by this time we have actually lost more than 80,000. In view of the extreme market trend of the stock, one word in a row If the board drops to the limit, you can't sell it even if you want to. The financing company should notify the investors to increase the margin, otherwise it will be liquidated. Otherwise, if it continues to fall, the position will be filled, and the financing company will lose money. So Generally, capital allocation companies will issue an early warning when the investors lose about 80% of their funds.

Finally, a reminder, there are inherent risks in the stock market. If the leverage of capital allocation is added, the enhancement will be considerable. Once the position is too heavy, extreme market conditions or extreme stocks will occur, then a liquidation will occur. As we all know, the first half of 2014-2015 was a leveraged bull market, and the extreme decline that began in June 2015 was a result of the state’s suppression of the peripheral capital allocation market, which firmly required the financial market to deleverage, and peripheral capital allocation companies were forced to It is caused by the level of capital allocation, so in terms of capital allocation, it shows that the country does not allow it in principle. Therefore, for the sake of your own risk and safety, I would like to remind everyone again not to allocate funds.