Position Size
$100
A perpetual contract lets you bet on a price without owning the asset. You put up a small amount of money (margin) and control a much bigger position size. The exchange just tracks the price difference between your entry and now, and settles your profit or loss against your margin.
No expiry date — that's the "perpetual" part. You hold it until you close it, or until the exchange closes it for you (liquidation).
Leverage decides how big a position your margin can control. $10 margin at 10x controls a $100 position. Drag it below and watch position size scale while margin stays put.
Your margin is the cushion that absorbs price moving against you. Once the price drops enough that your losses would eat through nearly all your margin, the exchange force-closes your position — that's the liquidation price. You don't choose this; it's protection for the exchange, not for you.
The higher your leverage, the thinner the cushion, the closer liquidation sits to your entry price.
Here's the actual mechanism. With spot trading (just buying the asset outright), your return on capital equals the price move. Price up 5%, you're up 5%. With perps, your margin is small compared to position size — so that same 5% move is calculated against the full position, not your margin. The return on your margin gets multiplied by leverage.
That's the entire trick. Leverage doesn't make the asset move more, doesn't give you better information, doesn't give you an edge. It just re-scales the same price move against a smaller pile of your own money. Drag the slider below — same 5% market move, three leverage levels, same margin each time.
Here's the real promise of leverage. A trader with $500 at 2x and a trader with only $10 at 100x can both control the exact same $1,000 position. Same price move, same dollar profit — leverage genuinely puts a small budget on equal footing with a big one, in terms of exposure.
But the budgets aren't paying the same price for that access. The $10 trader's margin is a paper-thin cushion — a routine 1% wobble wipes it out. The $500 trader can absorb a 50% crash and still be holding the position. Same opportunity, wildly different room to be wrong about timing. Drag the slider below and watch both traders live through the exact same price move.
The slider in section 04 showed three leverages at a time. Here's the full picture at once — $100 margin, a few common price moves, every leverage from 1x to 100x. Red cells mean the position is liquidated before that move even finishes playing out.
| Leverage | +10% move | +5% move | -5% move | -10% move |
|---|---|---|---|---|
| 1x | +$10 (+10%) | +$5 (+5%) | -$5 (-5%) | -$10 (-10%) |
| 3x | +$30 (+30%) | +$15 (+15%) | -$15 (-15%) | -$30 (-30%) |
| 5x | +$50 (+50%) | +$25 (+25%) | -$25 (-25%) | -$50 (-50%) |
| 10x | +$100 (+100%) | +$50 (+50%) | -$50 (-50%) | LIQUIDATED |
| 50x | +$500 (+500%) | +$250 (+250%) | LIQUIDATED | LIQUIDATED |
| 100x | +$1000 (+1000%) | +$500 (+500%) | LIQUIDATED | LIQUIDATED |
This trips almost everyone up once. If price drops and your position is bleeding, adding margin (lowering effective leverage) pushes your liquidation price further away — buying time. It does not recover the loss already sitting on the position. Your PNL only depends on entry vs. mark price. Period.
Spot holding has no recurring fee just for holding. Perps do — it's called the funding rate, paid between longs and shorts every few hours (usually every 1 or 8 hours depending on the exchange). It exists to keep the perp price tethered to the real spot price.
When more traders are long than short, longs pay shorts (and vice versa). It's usually small — fractions of a percent per period — but it compounds over time if you hold a position for weeks, which matters since you already run long-horizon DCA elsewhere. A perp held open for months can quietly bleed meaningful funding cost even while price sits flat.
If you want to limit downside on purpose — not just delay liquidation — that's what Stop Loss (SL) is for. You set a price; if mark price hits it, your position auto-closes at roughly that level, on your terms, before liquidation engine ever gets involved. Take Profit (TP) is the mirror: auto-close once you've made your target gain.
These cover every misunderstanding that came up today. No pressure, just see where it sticks.