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Leverage and margin

Leverage lets a small margin hold a big position. It makes every move bigger, in both directions.

6 minLesson 3 of 63 questions at the end

Key ideas

  1. 1Margin is your money set aside for a position. Leverage is how many times bigger the position is than the margin.
  2. 2At 10x, a 1% move in the price is a 10% move in your margin. A 10% move against you wipes the margin out.
  3. 3Cross margin uses your whole account to back positions; isolated uses only that position’s margin. Lance uses cross wherever the market allows it.
  4. 4Lower leverage gives the price more room before liquidation. It doesn’t change what each dollar of size earns or loses.

The idea

Margin is the part of your money set aside for a position. Leverage is how many times bigger the position is than the margin.

Formula
Margin = position size ÷ leverage
Amounts in Lance are always the position size.
Worked example: $100 of margin at 10xBTC at an example price
Position size
$100 × 10 = $1,000
BTC rises 2%
100,000 → 102,000
PnL
+$20
ROE (on your $100)
+20%
If BTC fell 2% instead
−$20, −20% ROE

Leverage multiplies the move on your margin by 10, in both directions.

Try it

Leverage and liquidation simulator

The liquidation price uses only the position’s own margin, the strictest case. With cross margin, the rest of your balance gives more room.

BTC at an example priceEntry 100,000
Side
Margin$100
Leverage10x
Move the price0.0% → 100,000
−20%−10%0+10%+20%
Position size
$1,000
$100 × 10
Liquidation price
91,139
−8.9% from entry
PnL
$0.00
Before fees
ROE
0.0%
A 1% move is 10% of your margin

At 10x, a 8.9% move down would liquidate this position.

Cross and isolated

Cross margin
  • Your whole available balance backs your positions
  • More room before liquidation
  • A liquidation can take more of your account
Isolated margin
  • Only the position’s own margin backs it
  • Liquidation comes sooner
  • A liquidation takes only that margin

Lance uses cross margin wherever Hyperliquid allows it for the market, and shows the margin type on each position. One leverage applies to a market at a time: a new order must match the position and orders already there.

Choosing leverage

Leverage doesn’t make a trade better; it only uses less margin for the same size and puts liquidation closer. A sound order of decisions:

  1. 1Decide what you can lose on this trade.
  2. 2Decide where your stop goes, where the idea is proven wrong.
  3. 3Let those two set the size (size by risk).
  4. 4Use the lowest leverage your margin allows for that size.

Common mistakes

  • Picking leverage for the size you want. Choose the position size by the risk you can take, then the lowest leverage your margin allows.
  • Thinking 1x means no risk. At 1x a long can still lose as the price falls, just without liquidation coming early.
  • Forgetting that one leverage applies to everything on a market. Lance keeps a market’s leverage the same for the position and its orders.

Check yourself

Question 1 of 3

You open a $500 position at 5x. How much margin does it use?

Try it in Lance

Watch the margin and the liquidation price change as you slide, with the size held the same.

Move the leverage slider
Up nextLesson 4 of 6LiquidationWhen losses eat through the margin, Hyperliquid closes the position. Here is where that line is.Next lesson
Previous: Long and short

Lance Learn is education, not advice. Examples use made-up or rounded numbers and say so; nothing here tells you what to trade.

Trading perpetual futures with leverage is high risk. Prices can move fast and you can lose all the money you put in. Lance is software: it does not give investment advice, manage money or trade on anyone’s behalf. Trades are executed on Hyperliquid, a third-party exchange that is not affiliated with Lance. Lance is not available to persons in the United States, the United Kingdom and sanctioned countries.