# Margin Call Thresholds ⎊ Area ⎊ Resource 2

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## What is the Threshold of Margin Call Thresholds?

Margin call thresholds define the minimum level of collateral required to maintain an open leveraged position in derivatives trading. When the value of a trader's collateral falls below this specific threshold, a margin call is triggered. This mechanism serves as a critical risk control measure to protect both the trader and the counterparty from excessive losses.

## What is the Collateral of Margin Call Thresholds?

The calculation of margin call thresholds is directly linked to the value of the collateral pledged by the trader. The threshold is typically expressed as a percentage of the position's value or as a specific maintenance margin requirement. In cryptocurrency derivatives, collateral can be volatile, necessitating dynamic adjustments to the threshold based on real-time market fluctuations.

## What is the Liquidation of Margin Call Thresholds?

Failing to meet the margin call threshold results in liquidation, where the position is automatically closed to prevent further losses. The threshold level determines the buffer zone before forced liquidation occurs. Setting appropriate thresholds is essential for balancing capital efficiency for traders with the solvency requirements of the exchange or protocol.


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## [Real Time Market Insights](https://term.greeks.live/term/real-time-market-insights/)

## [Margin Call Latency](https://term.greeks.live/term/margin-call-latency/)

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**Original URL:** https://term.greeks.live/area/margin-call-thresholds/resource/2/