Forced Position Closing

Forced position closing is the final act of a liquidation engine where a trader's position is terminated to protect the integrity of the exchange. This happens when the trader fails to meet margin requirements or when the system determines that the risk of further loss is too high.

The process is executed programmatically, often by selling the underlying assets into the order book. While necessary for platform safety, it can lead to sudden price spikes or drops if large positions are closed simultaneously.

Traders must understand that their positions are subject to these rules upon signing the terms of service. It is the ultimate enforcement mechanism of the contract between the trader and the exchange.