Forced Selling

Forced selling refers to the compulsory sale of an asset or investment, typically necessitated by external pressures, such as a margin call, bankruptcy, or legal obligations. This situation often arises when an investor is unable to meet financial requirements or obligations, prompting the sale to recover losses or settle debts. Forced selling can lead to a significant decrease in the asset’s market value, as it often occurs in a rush or during unfavorable market conditions, when there are more sellers than buyers.