I'll explain a concept that many newcomers to the market often confuse: what is a margin call and how does it differ from forced liquidation.

First, understand the risk. The basic formula is: risk = account capital / margin held. For example, you have 10,000 yuan in your account and open a full position, with all 10,000 yuan as margin. At this point, risk = 100%, which is normal according to the brokerage's regulations.

Now, suppose the market moves against you, and your account loses 1,000 yuan, leaving 9,000 yuan. The risk now is 90%. This is the first stage—what is a margin call at a mild level, where the broker will send a notification asking you to add more margin. You still have a chance to handle the situation.

But if losses continue, and you lose another 4,000 yuan, the risk becomes 60% (6,000 / 10,000). At this point, you've reached the hard liquidation threshold— the broker will automatically close all your positions to protect both parties. The remaining account balance is 6,000 yuan.

But the worst case is when a true margin default occurs. If you lose 12,000 yuan—exceeding your initial capital—the account will go into negative 2,000 yuan. At this point, not only do you lose all your money, but you also owe the broker 2,000 yuan. That is the trading margin deposit that the company has paid to the exchange.

How to distinguish: forced liquidation is when the broker intervenes to protect the account, which still has remaining funds. Margin default is when your account not only loses everything but also turns negative—you owe money.

In reality, many people lump all three situations together, but the key point is that you must always monitor your account risk. Understanding what a margin default is helps you recognize the level of danger.

One final note: if you default and do not repay the debt, you may be reported to credit systems, possibly blacklisted from the market or face legal action. Trading is playing by the rules, and risk management is a vital survival skill in this market.