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ROUTE 11 / Go deeper

Understand a leveraged position

Track notional exposure, equity, funding, and liquidation.

5 ideasAbout 30 minutesRead in order, or choose a step

Leverage makes a position sensitive to a larger exposure than its equity alone could buy. A collateral loan and a perpetual contract implement that exposure differently. This path follows the debt or contract obligation and the mechanism that can close the position.

  1. 01

    Leverage and recursive borrowing

    Measure exposure against equity

    Small underlying moves can translate into large equity changes.

  2. 02

    Derivatives and margin

    Distinguish a contract from an asset

    A payoff claim does not necessarily confer ownership of the underlying.

  3. 03

    Perpetual futures and funding

    Trace funding and margin

    Periodic transfers and liquidation rules matter alongside price direction.

  4. 04

    Oracles and outside information

    Identify the reference price

    Index, mark, and execution prices can play different roles.

  5. 05

    Liquidation and bad debt

    Understand forced reduction

    Liquidation mechanics depend on the venue and the type of position.

CHECK YOUR UNDERSTANDING

Does a perpetual long position necessarily mean the trader owns the underlying token?

Reveal the explanation

No. It creates contractual exposure under the venue’s settlement and margin rules. Spot ownership, collateral, and derivative payoff are separate concepts.

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