To unwind is to close out a trading position, with the term tending to be used when the trade is complex or large. Unwinding also refers to the correction of a trading error, since correcting a trading error may be complex or require multiple steps or trades. For example, a broker mistakenly sells part of a position when an investor wanted to add to it. The broker would have to unwind the transaction by first buying the sold shares and then purchasing the shares that should have been purchased in the first place.
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