Forced Liquidation

AAA

DEFINITION of 'Forced Liquidation'

An action taken by brokerage houses that offsets and closes all positions within delinquent customer accounts in order to reduce exposure.

INVESTOPEDIA EXPLAINS 'Forced Liquidation'

Forced liquidations generally occur after warnings have been issued by the broker regarding the under-margin situation of an account. Should the account holder choose not to meet the margin requirements, the broker has the right to sell off the positions.

RELATED TERMS
  1. Liquidation Value

    The total worth of a company's physical assets when it goes out ...
  2. Voluntary Liquidation

    A corporate liquidation that has been approved by the shareholders ...
  3. Minimum Margin

    The initial amount required to be deposited in a margin account ...
  4. Margin Debt

    1. The dollar value of securities purchased on margin within ...
  5. House Call

    A brokerage house notification that the customer's equity in ...
  6. Initial Margin

    The percentage of the purchase price of securities (that can ...
Related Articles
  1. 7 Investing Mistakes And How To Avoid ...
    Investing Basics

    7 Investing Mistakes And How To Avoid ...

  2. Margin Trading
    Options & Futures

    Margin Trading

  3. How do I unlever beta?
    Fundamental Analysis

    How do I unlever beta?

  4. Pick the Right Brokerage Account for ...
    Options & Futures

    Pick the Right Brokerage Account for ...

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center