# How Can a Trader Avoid Liquidation in a Highly Leveraged Position? ⎊ Path

**Published:** 2025-12-04
**Author:** Greeks.live
**Categories:** Path

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## How Can a Trader Avoid Liquidation in a Highly Leveraged Position?

A trader can avoid liquidation by actively managing their risk. The most direct methods are reducing leverage, adding more collateral to the margin account (to move the liquidation price further away), and setting a stop-loss order to automatically close the position before the liquidation price is reached.

Traders must also monitor the maintenance margin level and respond promptly to margin calls.

- [How Does a ‘Stop-Loss’ Order Help Manage the Risk of Liquidation?](https://learn.greeks.live/path/how-does-a-stop-loss-order-help-manage-the-risk-of-liquidation/)

- [How Does the ‘Liquidation Price’ Change with Varying Leverage Levels?](https://learn.greeks.live/path/how-does-the-liquidation-price-change-with-varying-leverage-levels/)

- [Explain the Concept of ‘Trailing Stop-Loss’ and Its Advantage over a Fixed Stop-Loss](https://learn.greeks.live/path/explain-the-concept-of-trailing-stop-loss-and-its-advantage-over-a-fixed-stop-loss/)

- [How Does Order Book Liquidity Influence the Choice between Stop-Loss and Stop-Limit?](https://learn.greeks.live/path/how-does-order-book-liquidity-influence-the-choice-between-stop-loss-and-stop-limit/)

- [How Can a ‘Stop-Loss’ Order Be Used to Mitigate Liquidation Risk in Leveraged Trading?](https://learn.greeks.live/path/how-can-a-stop-loss-order-be-used-to-mitigate-liquidation-risk-in-leveraged-trading/)

- [What Is the Difference between a Stop-Loss Order and a Stop-Limit Order in Crypto Trading?](https://learn.greeks.live/path/what-is-the-difference-between-a-stop-loss-order-and-a-stop-limit-order-in-crypto-trading/)

- [Explain the Role of “Stop-Loss Hunting” in Exacerbating a Flash Crash](https://learn.greeks.live/path/explain-the-role-of-stop-loss-hunting-in-exacerbating-a-flash-crash/)

- [What Is a ‘Liquidation Price’ and How Does It Relate to the Stop-Loss?](https://learn.greeks.live/path/what-is-a-liquidation-price-and-how-does-it-relate-to-the-stop-loss/)

## Glossar

### [Avoid Liquidation](https://learn.greeks.live/area/avoid-liquidation/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Strategy ⎊ Avoiding liquidation requires proactive risk management strategies focused on maintaining a healthy margin ratio.

### [Maintenance Margin](https://learn.greeks.live/area/maintenance-margin/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Collateral ⎊ Within cryptocurrency derivatives and options trading, the maintenance margin represents the minimum equity a trader must maintain in their account to cover potential losses.

## Discover More

### [What Is "Liquidation Cascade" in a Highly Volatile Crypto Market?](https://learn.greeks.live/path/what-is-liquidation-cascade-in-a-highly-volatile-crypto-market/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is "Liquidation Cascade" in a Highly Volatile Crypto Market?](https://learn.greeks.live/wp-content/uploads/2025/10/Abstract-Visualization-of-Decentralized-Finance-Option-Structure-Unfolding-Towards-Liquidity-Pool-Access.webp)

A sharp price drop triggers a wave of forced liquidations, which further depresses the price, causing more liquidations in a spiral.

### [How Does a 'Margin Call' Occur in a Leveraged Futures Position?](https://learn.greeks.live/path/how-does-a-margin-call-occur-in-a-leveraged-futures-position/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a 'Margin Call' Occur in a Leveraged Futures Position?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetrical-Portfolio-Rebalancing-Dynamics-Illustrated-Through-Hedging-Instrument-Balance-Modeling.webp)

Losses drop account equity below the maintenance margin level, prompting the broker to demand additional funds to restore the balance to the initial margin level.

### [What Is the Liquidation Risk When Using Leveraged Perpetual Futures for Hedging?](https://learn.greeks.live/path/what-is-the-liquidation-risk-when-using-leveraged-perpetual-futures-for-hedging/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Liquidation Risk When Using Leveraged Perpetual Futures for Hedging?](https://learn.greeks.live/wp-content/uploads/2025/10/Crystallized-Hedging-Structures-Visualizing-Digital-Asset-Volatility-Surface-Derivatives.webp)

A sharp price rise in the underlying asset can trigger the liquidation of the leveraged short hedge, removing the protection when the DAO needs it.

### [Does the Volatility of the Underlying Asset (E.g. a Highly Volatile Altcoin) Necessitate a Longer or Shorter TWAP Window?](https://learn.greeks.live/path/does-the-volatility-of-the-underlying-asset-e-g-a-highly-volatile-altcoin-necessitate-a-longer-or-shorter-twap-window/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Does the Volatility of the Underlying Asset (E.g. a Highly Volatile Altcoin) Necessitate a Longer or Shorter TWAP Window?](https://learn.greeks.live/wp-content/uploads/2025/10/Microscopic-View-of-Option-Contract-Hinge-Point-Near-Teal-Liquidity-Pool-Boundary.webp)

Higher volatility requires a longer TWAP window to effectively smooth out extreme price fluctuations for a stable average.

### [What Is the "Liquidation Price" and How Is It Calculated for a Leveraged Futures Position?](https://learn.greeks.live/path/what-is-the-liquidation-price-and-how-is-it-calculated-for-a-leveraged-futures-position/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the "Liquidation Price" and How Is It Calculated for a Leveraged Futures Position?](https://learn.greeks.live/wp-content/uploads/2025/10/Metallic-Finishes-Representing-Layered-Structured-Collateral-in-Decentralized-Finance-Protocols.webp)

Liquidation price is the market price that triggers an automatic closure of a leveraged position when the margin collateral equals the maintenance margin.

### [How Is the 'Margin Requirement' Calculated for a Leveraged Position?](https://learn.greeks.live/path/how-is-the-margin-requirement-calculated-for-a-leveraged-position/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Is the 'Margin Requirement' Calculated for a Leveraged Position?](https://learn.greeks.live/wp-content/uploads/2025/10/Symmetric-Aperture-Assembly-Modeling-Digital-Asset-Mechanism-Convergence-Parameters-Quantifying-Blockchain-Liquidity-Swaps.webp)

Calculated as a percentage of the total position value, it is the minimum collateral a trader must deposit to open and maintain a leveraged position.

### [Why Might a Short Option Position Require a Higher Margin than a Long Option Position?](https://learn.greeks.live/path/why-might-a-short-option-position-require-a-higher-margin-than-a-long-option-position/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Might a Short Option Position Require a Higher Margin than a Long Option Position?](https://learn.greeks.live/wp-content/uploads/2025/10/Interlocking-Mechanism-Precision-High-Frequency-Trading-Execution-in-Decentralized-Finance-Infrastructure.webp)

The short option position has potentially unlimited or substantial loss risk, necessitating a high margin requirement to cover potential obligation.

### [How Is the Bankruptcy Price Calculated for a Long Position versus a Short Position?](https://learn.greeks.live/path/how-is-the-bankruptcy-price-calculated-for-a-long-position-versus-a-short-position/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Is the Bankruptcy Price Calculated for a Long Position versus a Short Position?](https://learn.greeks.live/wp-content/uploads/2025/10/Abstract-Visualization-of-Cross-Hatched-Collateralized-Debt-Positions-Versus-Synthetic-Option-Replication.webp)

Long: Entry Price - Initial Margin per Unit. Short: Entry Price + Initial Margin per Unit. It is the zero-equity point.

### [Can a Margin Call Be Issued for a Non-Leveraged Position?](https://learn.greeks.live/path/can-a-margin-call-be-issued-for-a-non-leveraged-position/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Can a Margin Call Be Issued for a Non-Leveraged Position?](https://learn.greeks.live/wp-content/uploads/2025/10/Crystalline-Bifurcation-Balancing-Volatile-Digital-Asset-Swaption-Payoffs-Across-Impermanent-Loss-Vectors.webp)

No, margin calls are exclusively for leveraged positions to ensure collateral covers borrowed funds and prevents negative equity.

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**Original URL:** https://learn.greeks.live/learn/how-can-a-trader-avoid-liquidation-in-a-highly-leveraged-position/
