What it means
Liquidation (or 'offsetting') is the act of closing an open position by entering an equal-and-opposite trade. Long 1 standard lot EUR/USD → enter a 1-standard-lot short EUR/USD to flatten. The opposing trade extinguishes the original position; final P/L is recognized at the closeout. Margin held against the position is released back to free cash.
Why it matters
Every FX position must eventually be offset to realize its P/L — there's no physical delivery at retail. Understanding liquidation mechanics matters for margin calculation, partial-close strategies, and risk management on positions held through volatile windows.
How to use it
Standard close: hit the 'close position' button or place an opposite-direction market/limit order of equal size. Partial close: place an opposing order of less than the full position size; the remaining net position stays open. For multi-lot positions on FIFO brokers, the oldest lots close first regardless of which UI button you press.
Want a worked example or a deeper dive? Ask Rocky how this concept applies to your specific watchlist or trade idea.
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