# Liquidation Triggers ⎊ Area ⎊ Resource 3

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## What is the Trigger of Liquidation Triggers?

Liquidation triggers are predefined conditions that initiate the forced closure of a leveraged derivatives position. These triggers are typically activated when a position's collateral value falls below a specific maintenance margin threshold. The purpose of the trigger is to prevent the position from incurring losses that exceed the posted collateral.

## What is the Risk of Liquidation Triggers?

In cryptocurrency derivatives, liquidation risk is amplified by high market volatility and rapid price movements. The calculation of the trigger price must account for potential slippage and market depth to ensure efficient liquidation. In decentralized finance, liquidation triggers are often automated by smart contracts, removing human intervention.

## What is the Protocol of Liquidation Triggers?

The design of liquidation triggers is a critical component of risk management protocols for derivatives exchanges. Different protocols employ varying methodologies, such as using a single oracle price or a time-weighted average price (TWAP) to determine the trigger point. The choice of trigger mechanism directly impacts the stability and fairness of the platform.


---

## [Model Calibration Procedures](https://term.greeks.live/term/model-calibration-procedures/)

## [Initial Vs Maintenance Margin](https://term.greeks.live/definition/initial-vs-maintenance-margin/)

## [Game Theory Interactions](https://term.greeks.live/term/game-theory-interactions/)

## [Market Correlation Spikes](https://term.greeks.live/definition/market-correlation-spikes/)

---

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**Original URL:** https://term.greeks.live/area/liquidation-triggers/resource/3/