# Can a Trader Prevent Liquidation after a Margin Call? ▴ Learn

**Published:** 2025-11-22
**Categories:** Learn

---

## Can a Trader Prevent Liquidation after a Margin Call?

Yes, a trader can prevent liquidation after receiving a margin call by promptly adding more collateral (margin) to their account. This action increases the account equity, raising the margin ratio back above the maintenance margin level.

Alternatively, the trader can partially close the position to reduce the margin requirement. If neither action is taken before the margin falls to the liquidation level, the position will be forcibly closed.

What Action Can a Trader Take to Restore Their Margin above the Maintenance Level?

Explain the Difference between ‘Initial Margin’ and ‘Maintenance Margin’

What Is the Difference between Approving a Token for a Protocol versus Depositing It into a Protocol’s Vault?

What Is the Risk of Liquidation in a Highly Leveraged Naked Call Position?

## Discover More

- 
### [How Can a Trader Use Vega to Take a Position on Expected Volatility Changes?](https://crypto.greeks.live/learn/how-can-a-trader-use-vega-to-take-a-position-on-expected-volatility-changes/)
![A highly polished planar glass element, exhibiting clear greenish edge refraction, rests upon a small, perfectly spherical glass bearing which acts as a central fulcrum point. This structure suggests a delicate equilibrium reminiscent of asset valuation methodologies within decentralized finance DeFi. The glass is supported on one end by a beige, curved substratum contrasting sharply with the dark, textured background field, possibly representing stable asset foundations or underlying collateral. On the opposite side, two glossy white spheres imply systemic counterparty exposure or liquidity pools. The composition evokes concepts of imperfect hedging precision a volatile option exposure versus the calculated risk inherent in managing synthetic assets, requiring constant delta adjustments and managing basis risk across perpetual futures markets.](https://crypto.greeks.live/wp-content/uploads/2025/10/Glass-Fulcrum-Balancing-Digital-Asset-Volatility-Against-Option-Contract-Strike-Price-Delta-Hedging.jpg)

Buy options for expected volatility increase (Long Vega); Sell options for expected decrease (Short Vega).

- 
### [What Is “Cross Margin” versus “Isolated Margin”?](https://crypto.greeks.live/learn/what-is-cross-margin-versus-isolated-margin/)
![This abstract visual composition suggests the intricate interconnection between underlying asset structures and overlaid financial instruments a dark indigo curve meets a highly polished off white junction supporting a beige structural element extending towards a luminous cyan sphere against absolute blackness. It models the concept of collateralized debt positions CDP facilitating synthetic asset creation within DeFi primitives. The dark mass symbolizes locked reserves or staked assets governing the blue-chip token base supporting the bright junction representing the smart contract interface or automated market maker AMM architecture. The extending rod depicts the trajectory of a leveraged long position or perpetual futures contract interaction, balancing against the upper cyan sphere which could analogize an option's strike price boundary or a volatile synthetic derivative product under sovereign governance structures.](https://crypto.greeks.live/wp-content/uploads/2025/10/Abstract-Representation-of-On-Chain-Liquidity-Pool-Mechanisms-Supporting-Decentralized-Exchange-Settlement-Layers.jpg)

Isolated margin limits risk to a single position; cross margin uses the entire account balance as collateral for all trades.

- 
### [What Is the Term for an Account Balance Becoming Negative after Liquidation?](https://crypto.greeks.live/learn/what-is-the-term-for-an-account-balance-becoming-negative-after-liquidation/)
![The composition features intersecting, razor-sharp blades ▴ one dark matte, one pale reflective ▴ symbolizing directional market forces or execution timelines. These intersect precisely over translucent, viscous spheroids exhibiting refraction, mimicking liquid market depth or asset slippage during high-frequency swaps. This configuration abstracts the critical metastability inherent in managing option Greeks like Vega sensitivity against sudden volatility spikes, specifically within decentralized finance structures like Automated Market Maker liquidity pools experiencing impermanent loss. The smooth, curved bodies suggest underlying collateral or bundled derivative products such as exotic options or complex structured products awaiting strike realization, emphasizing the precarious equilibrium required for delta hedging in volatile spot crypto markets, where collateralization ratios dictate settlement outcomes.](https://crypto.greeks.live/wp-content/uploads/2025/10/Crystalline-Bifurcation-Balancing-Volatile-Digital-Asset-Swaption-Payoffs-Across-Impermanent-Loss-Vectors.jpg)

"Negative equity" or "bankruptcy," where the loss exceeds the margin, and the deficit is covered by the insurance fund.

- 
### [How Can a Trader Use Vega to Speculate on Implied Volatility?](https://crypto.greeks.live/learn/how-can-a-trader-use-vega-to-speculate-on-implied-volatility/)
![This abstract rendering depicts a conceptual model of market equilibrium where disparate asset classes counterbalance upon a structural fulcrum. A large, matte white sphere partially submerged in a blue speckled region rests on one side against a backdrop of absolute black, symbolizing deep liquidity pools or dark pools. Opposing it, a smaller, highly reflective sphere, bisected into teal textured and pitch black zones, counterbalances the system under a bright cyan sky suggesting high-alpha potential. This visual metaphor illustrates the delicate balancing act required in managing volatility skew across perpetual swaps and the pricing of deep out of the money options contracts relative to spot price deviations within opaque decentralized exchange environments, highlighting systemic risk management.](https://crypto.greeks.live/wp-content/uploads/2025/10/Asymmetric-Leveraged-Bifurcation-Modeling-Decentralized-Finance-Volatility-Surface-Dynamics.jpg)

By buying options (long Vega) if they expect implied volatility to rise or selling options (short Vega) if they expect it to fall.

- 
### [How Can a DAO Treasury Manage Liquidation Risk on a Perpetual Swap Position?](https://crypto.greeks.live/learn/how-can-a-dao-treasury-manage-liquidation-risk-on-a-perpetual-swap-position/)
![Two opposing, sleek composite structures featuring pale mint cyan elements and beige planar surfaces converge toward a central nexus composed of dark, segmented toroids linked by fine, tensioned filaments simulating atomic-level linkage. This arrangement conceptually models the dynamic equilibrium required in layered decentralized finance structures, perhaps visualizing the interaction between Layer Two scaling solutions and the main chain settlement layer. The composition reflects concepts of risk parity funding mechanisms within structured products and the constant balancing act between on-chain consensus security and off-chain execution efficiency, essential for high-frequency options arbitrage strategies utilizing novel derivative instruments. The aesthetic suggests a finely tuned, self-regulating digital apparatus representing complex smart contract interactions or cross-chain interoperability protocols demanding stringent collateral management.](https://crypto.greeks.live/wp-content/uploads/2025/10/Symmetric-Counterbalancing-Mechanism-Modeling-Decentralized-Autonomous-Organization-Governance-Structures.jpg)

By maintaining a high collateralization ratio, avoiding excessive leverage, and actively adding margin to the position to prevent automatic closure.

- 
### [In a Fragmented Market like Cryptocurrency, How Can a Trader Maximize the Chance of Price Improvement?](https://crypto.greeks.live/learn/in-a-fragmented-market-like-cryptocurrency-how-can-a-trader-maximize-the-chance-of-price-improvement/)
![This abstract visualization depicts dual, contrasting circular structures resembling stylized tire cross-sections one beige and one deep cyan, intersecting a sharp, silver, bladed instrument positioned diagonally across the center. This juxtaposition conceptually models the impact of high-frequency trading mechanisms on synthetic asset structures, perhaps representing options positions on a volatile cryptocurrency underlying asset. The sharp blade symbolizes kinetic market forces like extreme directional shocks or forced liquidation events impacting established implied volatility curves. Keywords include Gamma exposure hedging, delta neutral strategies, stochastic volatility modeling, realized slippage, and perpetual futures expiration dynamics. The composition evokes the precarious balance between premium collection and catastrophic portfolio exposure in complex structured products.](https://crypto.greeks.live/wp-content/uploads/2025/10/Deconstructed-Digital-Asset-Volatility-Surface-Intersected-by-Impending-Market-Skew-Hedging-Instruments.jpg)

Maximize price improvement in crypto by using smart order routing across multiple exchanges and placing non-aggressive limit orders within the spread.

- 
### [Can a Trader Choose to Apply the Mark-to-Market Rule to Non-Section 1256 Contracts?](https://crypto.greeks.live/learn/can-a-trader-choose-to-apply-the-mark-to-market-rule-to-non-section-1256-contracts/)
![Four glossy, high-albedo sectors radiating from a center point against absolute black suggest a complex geometric partitioning of underlying asset value. This visual stratification models portfolio allocation across decentralized finance instruments. The upper right sector displays an aqua-teal marbling effect, representing turbulent market dynamics or exotic volatility exposure within perpetual swaps contracts. The smooth, muted gray and deep indigo sections signify stable crypto asset holdings or defined risk parameters typical of European option expiration structures. This configuration visualizes the risk parity allocation between spot market exposure and leveraged derivatives settlement mechanisms, emphasizing idiosyncratic risk factors inherent in DeFi yield farming strategies. The visual contrast depicts the separation between delta hedging requirements and non-linear payoff profiles.](https://crypto.greeks.live/wp-content/uploads/2025/10/Multisegment-Volatility-Surface-Decomposition-Illustrating-Implied-Versus-Realized-Asset-Distribution.jpg)

Yes, a qualified "Trader in Securities" can elect Section 475(f) mark-to-market for all trading assets.

- 
### [What Is the Primary Difference between a Margin Call and a Liquidation Notice?](https://crypto.greeks.live/learn/what-is-the-primary-difference-between-a-margin-call-and-a-liquidation-notice/)
![This image visually represents stacked, alternating layers of deep indigo composite material and smooth tan spacers separated by polished metallic rings, suggesting structural complexity akin to layered security protocols or layered financial instruments. Conceptually, it maps to the iterative construction of synthetic option positions like collateralized debt obligations CDOs built from cryptocurrency baskets, illustrating modularity within structured finance. The domed blue apex symbolizes the maximum payout profile or the protected upper bound of a dynamic hedging strategy involving vega exposure management against volatile spot price action. It reflects disciplined risk stratification inherent in complex perpetual swaps and exotic derivative payoff matrices managed via algorithmic execution frameworks requiring granular position adjustment across multiple strike prices.](https://crypto.greeks.live/wp-content/uploads/2025/10/Layered-Stacking-of-Synthetic-Collars-Demonstrating-Delta-Hedging-Portfolio-Construction.jpg)

A margin call is a pre-emptive warning to add funds; a liquidation notice confirms the position has been forcibly closed.

- 
### [How Do Exchanges Prevent ‘Socialized Losses’ That Can Occur from Large Liquidations?](https://crypto.greeks.live/learn/how-do-exchanges-prevent-socialized-losses-that-can-occur-from-large-liquidations/)
![A macro view captures an assembly featuring highly polished metallic components surrounding a translucent cyan-tinged lens structure capped by sharp crystalline protrusions. This configuration metaphorically represents the structural integrity required for decentralized finance collateralized debt positions or complex perpetual swaps architecture. The sharp points symbolize the precision of automated market maker impermanent loss mitigation or tight bid ask spreads in over the counter digital asset trading. Markings on the base suggest precise calibration necessary for optimal oracle data feeds or efficient block finality consensus mechanisms within novel Layer 2 scaling solutions. The dark high contrast setting emphasizes the inherent technical sophistication and risk management protocols vital for navigating volatile cryptocurrency derivatives landscapes like volatility index tracking or dynamic hedging strategies.](https://crypto.greeks.live/wp-content/uploads/2025/10/Precision-Engineering-of-DeFi-Yield-Enhancement-Structures-Highlighting-Staking-Mechanisms-and-Liquidity-Provision-Prowess.jpg)

Exchanges use insurance funds to cover deficits and Auto-Deleveraging (ADL) to reduce profitable traders' leverage.

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