> ## Documentation Index
> Fetch the complete documentation index at: https://docs.monofin.xyz/llms.txt
> Use this file to discover all available pages before exploring further.

# 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.

> [!WARNING]
>
> 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.

> [!NOTE]
>
> 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](/markets/event-markets.md).

## 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](/account/risk.md).


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