Closing a position is the operation corresponding to opening a position, referring to closing an established trading position and realizing profit or loss settlement. Whether in futures, perpetual contracts, or CFDs, closing a position is a key step for investors to realize gains or stop losses.
1. How Closing Works
Long Position (Buy to Open)
If you previously bought to open (bullish), closing requires selling the same number of contracts.
After closing, the system calculates the difference between the buy and sell prices, resulting in profit or loss for the investor.
Short Position (Sell to Open)
If you previously sold to open (bearish), closing requires buying the same number of contracts.
After closing, the system calculates the difference between the sell and buy prices, realizing profit or loss settlement.
2. Closing Methods
Manual Closing: The investor chooses the timing to close the position on the trading platform based on market conditions.
Automatic Closing (Forced Liquidation): If the account margin is insufficient to maintain the position, the platform will automatically close the position to prevent further losses.
3. Key Considerations
Pay attention to market liquidity when closing; low liquidity may cause closing prices to deviate from expectations.
It is recommended to combine stop-loss/take-profit settings, plan your closing strategy in advance, control risk, and lock in profits.
Understand the platform’s settlement rules and fee policies to avoid affecting actual returns.
Summary
Closing a position is a critical step in contract trading for realizing profit and loss. Buying to open requires selling to close, and selling to open requires buying to close. Investors should plan their closing strategies carefully, combine stop-loss/take-profit and risk management, and trade prudently to navigate market fluctuations.