In trading markets, you often hear terms like "closing a position," "opening a position," and "liquidation," but what do these terms actually mean? Today, I will explain them to you one by one, especially clarifying the core concept of "closing a position" and when to close or open a position.
What does closing a position mean? The key to ending a position and confirming profit or loss
Simply put, closing a position means you actively end a trade. Whether you hold stocks, futures, or other financial instruments, closing a position involves liquidating all (or part of) them, officially ending that trade.
The main significance of closing a position is: only when you close it can your profit or loss be truly finalized. Before closing, your unrealized gains or losses are just "floating," fluctuating with market movements; but once you close, that number becomes your actual "realized profit and loss," which cannot be changed.
This is why closing a position is so crucial—it not only