Core Mechanics of Perps
Margin & Leverage
Margin is the collateral you put up to open a perp position. Leverage lets you control a larger position than your margin
You choose how much leverage you want to use, and you should keep this number as low as possible
Going Long or Short
When you trade perps, you're able to bet on price going either up or down, because you never own the asset, you are trading the direction of its price
Long (Buy) - You profit if price goes up, you lose if price goes down
Short (Sell) - You profit if price goes down, you lose if price goes up
Liquidation
Liquidation is when the exchange force closes your position because your margin can no longer cover the losses
Each position you open has a maintenance margin requirement. As price moves against you, your margin decreases. If your margin decreases below the requirement level, you will be liquidated. When you are liquidated, you lose the collateral on the position (margin)
You are able to view your liquidation level before you open a position, and can change it by using more or less margin / leverage