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Perps are simple to place and unforgiving to misunderstand. These are the three mechanics that decide whether your trade lives or dies.

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Leverage

Leverage (your multiplier) lets a small amount of collateral control a larger position: Gains and losses are calculated on the position size, not your collateral. A 10% move against a 10x position wipes out your margin. A 10% move against a 40x position wipes it out four times over.
Leverage magnifies losses exactly as much as gains. Most liquidations happen to traders who sized for the win and not for the wiggle. Lower multiplier = further liquidation price = more room to be early.

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Margin

Your margin is the collateral backing a position. Monofin shows your margin usage and estimated liquidation price on every ticket and every open position.
  • If the market moves against you, unrealized losses come out of your margin.
  • You can add margin to an open position to push the liquidation price further away.
  • When losses consume the margin available to the position, the position is liquidated.

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Funding

Perps never expire, so something has to keep the perp price anchored to the real market. That something is funding:
  • Periodically, one side pays the other. When funding is positive, longs pay shorts. When negative, shorts pay longs.
  • Funding is proportional to your position size and accrues while you hold.
  • The current rate and countdown are shown on every perp market page.
Funding is usually small, but on crowded trades it can get expensive to be on the popular side. It’s a cost (or income) of holding, not a fee to Monofin.

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Liquidation

Liquidation is the hard stop: when your margin can no longer cover the position’s losses, the venue closes the position automatically and you lose the margin on that position.
  • Your estimated liquidation price is shown before you confirm every trade — and on every open position.
  • Liquidation is a function of entry price, multiplier, and margin. Change any of the three and the liquidation price moves.
  • Stop losses trigger before liquidation when set sensibly — that’s what they’re for.
Liquidation applies to leveraged perp positions. Event-market shares can’t be liquidated — the most you can lose is what you paid for the shares. See Event markets.

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The one-paragraph version

Pick a multiplier you can survive being wrong on. Know your liquidation price before you confirm. Watch funding if you’re holding for days, not minutes. Set a stop loss like you mean it.