Leverage, funding, and liquidations

The three mechanics behind every perpetual trade on Monofin — explained in plain English.

Perps are simple to place and unforgiving to misunderstand. Three mechanics decide whether your trade lives or dies.

Leverage

Leverage (your multiplier) lets a little collateral control a larger position:

Collateral	Multiplier	Position size
$100	5x	$500
$100	10x	$1,000
$100	40x	$4,000

Gains and losses are calculated on the position size, not your collateral. A 10% move against a 10x position wipes the margin. Against a 40x position, 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.

Margin

Margin is the collateral backing a position. Monofin shows your margin usage and estimated liquidation price on every ticket and every open position.

• The market moves against you, unrealized losses come out of your margin.
• Add margin to an open position to push the liquidation price further away.
• Losses consume the margin available to the position → liquidation.

Funding

Perps never expire, so something has to anchor the perp price to the real market. That something is funding:

• Periodically, one side pays the other. Funding positive: longs pay shorts. Negative: shorts pay longs.
• Funding is proportional to position size and accrues while you hold.
• The current rate and countdown live on every perp market page.

Funding is usually small. On crowded trades it gets expensive to be on the popular side. It’s a cost (or income) of holding — not a fee to Monofin.

Liquidation

Liquidation is the hard stop: margin can no longer cover the position’s losses, the venue closes the position, that margin is gone.

• 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. See Event markets.

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 days, not minutes. Set a stop loss like you mean it. The full picture, with worked examples: Risk disclosure.