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Forced Buying

Forced buying occurs when market participants are required or strongly compelled to buy exposure as positions are closed or risk systems take action. Short liquidations are one source of forced buying in perpetual markets.

Why it matters to you

Forced buying can accelerate an upward move because the buying is being generated by position management or liquidation rather than simply a new discretionary decision to become bullish. During a short squeeze, forced buying can become particularly significant.

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