Futures and leverage · Practical guide
Before thinking about how much you might earn, understand the position size you control and what could cause you to lose it.
Exposure and margin are different things
Margin backs a position. Leverage allows that position to be larger than the capital used as collateral. That is why a small price change can have a large effect on margin.
Exposure of 1,000 USD initially backed by 100 USD represents a 10-to-1 ratio. An adverse move of 1% means a loss of about 10 USD on a linear contract: approximately 10% of that 100, before costs.
What liquidation means
The platform may close a position if the equity backing it no longer meets maintenance requirements. The contract rules, margin, fees, and the exchange’s reference price all play a role.
Do not calculate liquidation price with a simple proportion. Check the price and conditions shown by the platform. In a bot, the lower range limit and the liquidation price are not the same thing.
Isolated and cross margin
The isolated margin mode allocates a specific amount to a position. The cross margin mode may share the available balance of the same Futures wallet or bot across its positions, depending on the platform and configuration.
Also check whether automatic margin replenishmentis enabled: it can add funds from the available balance and move the liquidation price further away, helping you manage that risk. How it works depends on the platform; it may also increase exposed capital and does not guarantee protection from liquidation.
Costs and execution
In addition to trading fees, perpetual contracts may involve funding. A stop does not guarantee the exact exit price: slippage and unfavorable execution may occur.
Pre-trade checklist
- Identify the contract, collateral currency, and total exposure.
- Check the margin mode and maintenance rules.
- Estimate what an adverse move would do, including costs.
- Define an exit before entering and check whether it can execute.
- Do not assume that several bots automatically reduce combined exposure.
If you cannot yet explain these concepts in your own words, spend time learning first. Not opening a position is also a decision.
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