Chapter · Master Hyperliquid
Leverage, liquidation and funding
Leverage borrows against your margin so a small deposit controls a big position. If the market moves against you far enough to wipe out that margin, the position is liquidated: closed automatically, and you lose what you put in. Isolated margin risks only the collateral you assigned to one trade; cross margin shares your whole balance, so a bad trade can drain the rest. Higher leverage means the liquidation price sits terrifyingly close to entry.
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What you get asked
Match each margin idea to what it does
Isolated margin walls off the damage to one trade; cross margin can drain everything if a position goes bad. Beginners usually start isolated for exactly this reason.
You open a 10x long at an entry price of €100. Roughly what price liquidates the position?
At 10x, your margin is about 1/10 of the position, so a move of roughly 10% against you (down to near €90) wipes it out. Fees push it a touch higher in practice.
Why can a normal daily move liquidate a high-leverage position?
At 20x, a 5% move against you is a total wipeout, and crypto swings 5% on quiet days. The higher the leverage, the smaller the move that ends you.
When funding is positive, the crowded side is the longs, so ___ pay shorts a small recurring fee.
Positive funding means the perp trades above spot and longs are crowded, so longs pay shorts. Hold a leveraged position for days and funding quietly adds up.
Order the safety-first steps before any leveraged trade
A stop-loss closes you out before liquidation ever gets the chance, on your terms. Size small, always use a stop, and never risk money you need. 🐜
The rest of this chapter
The pro perps DEX, from first principles to your first stop-protected trade.