What is liquidation & how does it work?

In the simplest terms, liquidation involves selling something to create spendable cash that allows you to do other things – from growing your business to seeking new investment opportunities to simply paying the bills. Sign up for stock news with our Invested newsletter. Why Is It Called Liquidation?

What is liquidation level in forex?

Typically, the liquidation level is expressed as a percentage value of the assets in a trader's margin account. If a forex trader's positions go against them, their account will eventually reach the liquidation level, unless the trader injects additional funds. Another name for liquidation level is liquidation margin.

What does a share liquidation in my account mean?

An account liquidation occurs when the holdings of an account are sold off by the brokerage or investment firm where the account was created. In most cases, this is down to satisfy margin requirements.

What is liquidation margin?

The value of the account, based on market prices, is known as the liquidation margin. Consider a scenario where a trader makes a series of leveraged stock purchases. If the purchases begin to generate losses, the liquidation margin of the account will decline.