You already know what a perpetual future is. What you want now is the sequence: which decisions stand between a funded wallet and a closed position, in which order, and what each of them changes once the trade is live.
This guide follows that sequence. It does not reproduce Hyperliquid's interface button by button, because screens change faster than the mechanics underneath them. Where Hyperliquid documents a rule itself, for leverage, liquidation and funding, the article states it plainly. Everything else is general perp mechanics, described the way it usually works on an order-book venue.
Nothing here is a trade idea. Leverage magnifies losses in the same proportion as gains, liquidation is a real outcome, and no sequence of steps protects you from being wrong about direction.
Key Takeaways
- Trading a perp is a chain of decisions, and margin mode, leverage, order type and exit each shape how far a loss can reach.
- Hyperliquid sets maximum leverage per asset and checks leverage only when a position opens, so monitoring it afterwards is your job.
- Hyperliquid liquidates against the mark price and first tries to close a position on the order book before a backstop takes it over.
- The liquidation price you see on an open position is an estimate that moves with funding and, in cross margin, with your other positions.
The Venue Underneath the Steps
Hyperliquid runs a fully on-chain central limit order book. Orders match by strict price-time priority: the best price first, and at the same price the oldest order first. The market trades around the clock, so there is no closing bell and no weekend gap built into the schedule.
That design shapes everything below. Your order meets other traders' resting orders on a public book, which is why the choice between paying for immediacy and waiting for your price is a real one. Speed costs money. Patience costs certainty. The order book explainer covers how that matching works in detail.
Before any of the decisions in this guide, you need access to the venue and collateral to trade with. Connecting a wallet and depositing are interface steps, and they are exactly the kind of detail that changes from one release to the next. Our Hyperliquid venue page links to the official documentation, which is the place to follow them.
One point applies to any self-custodied wallet, on any venue. The recovery phrase is the account. Guard it. Whoever holds it controls the funds behind it, so it belongs offline and nowhere near a website that asks you to type it in.
Choosing the Market and the Side
A perpetual has no expiry date. Instead of converging at settlement, it relies on funding payments between longs and shorts to stay close to the price of its underlying asset. The funding rates explainer covers how that payment is calculated and who pays whom.
The side is the simplest decision on the screen and the one that matters most. A long gains when the price rises. A short gains when it falls. Get that wrong, and nothing else saves the trade. Everything that follows only decides how much a wrong call costs and how long you can stay in it.
Markets differ in more than the asset, and this is where Hyperliquid's own rules start. Maximum leverage varies by asset. The maintenance margin, which decides when a position is liquidated, is derived from that maximum and therefore differs by asset as well. Before you size anything, check the limits of the specific market instead of assuming they match the last one you traded.
Margin Mode: Decide What a Loss Can Reach
On Hyperliquid, a position runs in cross or isolated margin. In cross margin, collateral is pooled, so every cross position draws on the same account value. Isolated margin walls a position off with its own collateral, so it can only lose what you allocated to it.
The difference shows most clearly at the worst moment. When an isolated position on Hyperliquid is taken over in a backstop liquidation, only that position and its margin are transferred. Your cross margin and your cross positions are untouched. When a cross position is backstop liquidated, all of your cross positions and your cross margin go together.
Order matters here. Pick the mode before the size. The mode decides which collateral a losing position can reach, and a size only makes sense once you know that answer.
Cross margin has a real advantage: collateral is shared, so a winning position can support a losing one. The cost is that a single bad trade can drain the margin behind everything else. The full trade-off has its own article on isolated vs cross margin, so this guide stays with the sequence.
Leverage: A Ceiling, Not a Target
On Hyperliquid, leverage is a whole number you choose, up to the maximum of that market. Higher leverage means less collateral posted for the same position. It does not, by itself, make the position bigger. Size does that.
Size is the decision that sets your risk. Work out how much you are willing to lose if the trade fails, size the position from that, and let leverage follow as the consequence. Treated the other way round, as a dial to turn up, leverage quietly decides your risk for you. The leverage and margin basics walk through that order step by step.
One detail is easy to miss. Leverage is checked once, at the open. Hyperliquid's documentation says so directly: after a position is open, you are responsible for monitoring leverage usage to avoid liquidation. You can raise the leverage of an existing position without closing it, but the venue does not step in again while a losing position drifts toward its liquidation price.
CarrotFunding runs its own trading platform. The steps in this guide describe how a perp trade on Hyperliquid works, not the screens of that terminal.
Order Type: Certainty of Fill or Certainty of Price
Order-book trading usually comes down to three basic families of orders. A market order takes whatever the book offers right now. A limit order names your price and waits for the market to come to it. A stop order sits inactive until a trigger price is reached, then becomes a market or a limit order.
Which of the first two fits depends on whether you need the fill or the price more. In a fast perp market, that trade-off is sharp, and it has its own article: market order vs limit order.
Order books usually also accept options that change how an order behaves once it reaches the book. A post-only order only ever rests and never takes liquidity on arrival. An immediate-or-cancel order is dropped if it cannot fill at once.
A reduce-only order can only make an existing position smaller, never open a new one in the opposite direction. That last option is the one to know before you close anything.
The choice also reaches your costs. On Hyperliquid you pay standard maker and taker rates, so an order that rests on the book and one that takes from it are charged differently. The maker vs taker article explains why that gap exists. The current rates belong to the venue's own documentation, and this guide quotes none of them.
The Exit, Placed Before You Need It
The time to decide where a trade is wrong is before you enter it. A stop-loss turns that decision into an order, so it still executes while you are away from the screen. A take-profit does the same for the target. How far away a stop belongs is its own question, covered in stop-loss basics.
On Hyperliquid, a stop has a second job. The venue's liquidation documentation names stop-loss orders, or exiting before the mark price reaches the liquidation price, as the way to avoid losing the maintenance margin in a backstop liquidation. The section on liquidation below explains why that margin is at stake.
Check which price your stop listens to. Hyperliquid liquidates against the mark price, not the last trade on its book, and the price a stop triggers on is a design choice of each venue. The mark price vs index price article explains why those two numbers can tell different stories during a fast move.
Watching the Open Position
Once the position is open, two numbers deserve most of your attention. The first is the mark price, which Hyperliquid's liquidation check runs against. The second is the liquidation price, where that check turns into a forced close.
Read the liquidation price as a working estimate. Not a promise. Before you enter, Hyperliquid shows an estimate that can be off because liquidity on the book keeps changing.
After you enter, the displayed level is anchored to your actual entry price, but it can still differ from the real liquidation price. Funding payments move it, and in cross margin, so does the unrealized P&L of your other positions.
Funding keeps running for as long as you hold. On Hyperliquid, it is added to or subtracted from the balance of position holders at each funding interval. When the contract trades above the oracle price, longs pay shorts. When it trades below, shorts pay longs. Because every payment changes your balance, every payment also nudges your liquidation price.
When a position runs against you, the levers are usually the same. You can close part or all of it, add collateral to an isolated position, or deposit more if you trade cross. Adding collateral moves the liquidation level further away. It buys time. It does not make the trade right.
How Liquidation Works on Hyperliquid
A liquidation starts when your account equity falls below the maintenance margin. Hyperliquid measures this against the mark price, which combines external exchange prices with the state of its own order book. That makes it more robust than a single instantaneous price on the book.
The first attempt goes through the order book. Hyperliquid sends market orders for the full size of the position, which may close it fully or partly. If enough is closed for the maintenance requirement to be met again, any remaining collateral stays with you. Very large positions are sent to the book in portions rather than all at once.
If the book cannot do the job and equity keeps falling, a backstop liquidation follows. A liquidator vault takes over the position, and the maintenance margin is not returned to you. A stop is cheaper than a backstop. It closes the position on your terms while there is still margin left to protect.
The order of events is what is worth remembering: the book first, the backstop second, and the maintenance margin as the price of reaching the second stage.
Closing the Position
Closing is an order too. Just reversed. Marking it reduce-only makes sure it can only make the position you hold smaller and cannot open a new one the other way if the size is off. A market order closes at once at whatever the book offers. A limit order closes at your price or better, if the market comes to it.
The close turns unrealized P&L into a realized result, and the trading costs of both the opening and the closing fill are part of that result. A trade that looked profitable on the mark price can end smaller once the costs of getting in and out are counted, especially if both fills took liquidity.
The Sequence at a Glance
Put together, the sequence is short. The overview below only sums up what the sections above already said.
| Step | What you decide | What it changes later |
|---|---|---|
| Margin mode | Cross or isolated | Which collateral a losing position can reach |
| Leverage | A whole number up to the market's maximum | How much collateral the position ties up |
| Order type | Market, limit or stop, plus options such as reduce-only | Whether you get certainty of fill or of price |
| Exit | A stop-loss and a take-profit before you need them | When the position closes without you |
| Close | Reduce-only, at market or at a limit | The realized result, after costs |
If you trade a firm's account rather than your own wallet, the venue underneath can be the same while the screen in front of you is not. A firm's terminal decides which order types and settings it shows you, so it is worth asking how they map to the venue.
Conclusion
The clicks are the easy part. What decides the outcome is the order in which you answer the questions behind them: margin mode first, because it sets which collateral a loss can reach; size from your risk, with leverage as its consequence; an exit placed before the entry, not after the first bad candle. Hyperliquid documents the uncomfortable parts openly, including a liquidation price that moves while you hold and a backstop that keeps the maintenance margin. Read those pages once for the markets you trade. After that, the venue stops surprising you, and the only open question is the one no sequence answers: whether your view on direction is right.
FAQ
Does the leverage I set change my liquidation price in cross margin?
On Hyperliquid, no. For a cross margin position, the actual liquidation price does not depend on the leverage you set; lower leverage simply ties up more collateral. Isolated margin is different. There, leverage decides how much margin is allocated to the position, so it does move the liquidation price.
Why can a position be liquidated when the chart never touched my liquidation price?
Because the chart draws trades, while Hyperliquid liquidates against the mark price. The mark price blends external exchange prices with the state of the order book. During high volatility or on highly leveraged positions, the venue notes that the mark price can sit far from the book price, so the two can cross your level at different moments.
Does Hyperliquid take a cut of funding payments?
No. Funding on Hyperliquid is purely peer to peer: one side of the contract pays the other, and no fees are collected on the payments. It is still a real cost or income for your position, because it changes your balance for as long as you hold.
Is funding calculated on the mark price of my position?
Not on Hyperliquid. The funding payment converts your position size into a notional value using the spot oracle price, not the mark price. When the perp trades well away from spot, it is worth knowing which price your payment is based on.
