Applies to residents of New Zealand. Not for residents of restricted regions.
Futures basics — leverage, margin and liquidation
Step 5 of 6 · Updated: · 7 min read
Risk warning. Futures are high-risk leveraged products. Most beginners lose money. You can lose your entire margin quickly. Futures are restricted or not promoted in some countries (for example Brazil and Australia) — if this step is hidden for your country, it does not apply to you.
What a perpetual future is
A contract that tracks the price of an asset without expiry. You can go long (profit if price rises) or short (profit if price falls), and you post margin as collateral.
Leverage
With 10× leverage, a 10% move against you can wipe out your margin. Higher leverage = closer liquidation price. Beginners who use futures at all should stay at very low leverage.
Margin modes
- Isolated margin: risk is limited to the margin assigned to that position.
- Cross margin: your whole futures balance supports open positions — losses can spread.
Isolated margin is easier to control when learning.
Liquidation
If losses reduce your margin below the maintenance requirement, the exchange closes your position automatically. Always check the liquidation price shown before you confirm an order.
Funding rate
Every few hours, longs and shorts pay each other a funding fee depending on market conditions. Holding positions for a long time can cost more than the trading fee itself.
Fees on futures
Futures trading fees are charged on the full position size (not just your margin), which is why active futures traders pay large fees in total — and why the fee rate matters. Use the calculator to estimate with your own volume.
Before you start
- Practise on the exchange’s demo / testnet mode if available.
- Always set a stop-loss.
- Never add money to a losing position to “avoid” liquidation.