Is it necessary to add margin after liquidation?

Whether a margin call is required for a liquidated position depends on the specific circumstances. If the position is liquidated due to subjective factors such as excessive holdings and operational errors, it is usually not recommended to add more. However, if you encounter uncontrollable factors such as a black swan event, and you have sufficient financial strength and market judgment ability, you can consider adding a margin call to make up for the loss. After liquidating a position, you should evaluate your own financial situation and market risks and carefully decide whether to add more. After the additional increase, it is necessary to formulate a replenishment strategy to control risks and avoid further expansion of losses.

Do you have to add margin after liquidation?

Liquidation means that in margin trading, when the contract price When large fluctuations cause investors' losses to exceed the margin amount, the trading platform will force the liquidation of positions. After a liquidation, whether investors need to make a margin call depends on the specific circumstances.

1. Determine the reasons for liquidation

• The position amount is too large: The investor’s position amount exceeds the risk range he or she can bear, Resulting in losses exceeding handling fees and margin.
• Operational errors: Investors made operational errors, such as unreasonable setting of stop-loss orders, heavy positions chasing ups and downs, etc., resulting in losses.
• Extreme market conditions: Extreme market conditions, such as black swan events, cause sharp fluctuations in contract prices.

2. Check account status

• Log in to the trading platform to view the account balance and margin ratio.
• If the account balance is negative, it indicates that a liquidation has occurred.

3. Dealing with debt after liquidation

• Before margin call: Before margin call, investors The platform balance is still owed. The platform will recover debts based on the account's profit and loss, possibly by freezing assets, restricting withdrawals, etc.
• After the margin call has been made: After the margin call has been made, the investor has paid off the debt and the platform will no longer pursue repayment.
• Recovery time: The recovery time depends on the platform regulations, generally 1-2 trading days.

4. Decide whether to make a margin call

• Ability to make additional margin calls: If investors have the ability to make additional margin calls and believe that the market still has room for recovery, they may consider making additional margin calls.
• Inability to make additional margin calls: If investors are unable to make additional margin calls or believe that the market has reversed, they should not make additional margin calls to avoid further expansion of losses.
• Assess the risk: After a margin call, investors may face a greater risk of loss. Before adding additional funds, you should carefully evaluate the market situation and act within your capabilities.

5. Position Cover-Up Strategy

• Position Cover-up Amount: After adding margin, investors can re-cover the position, and the amount of position cover-up is based on Depends on market conditions and personal risk tolerance.
• Timing to cover positions: The choice of timing to cover positions is very important, and you should try to avoid periods of greater market volatility.
• Direction of cover: The direction of cover is the same as the direction of the original position, that is, long to cover long, short to cover short.

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