Leverage

Central to the concept of perpetual futures trading is the notion of leverage, which refers to the ability to control a larger position with a relatively small amount of capital. Leverage allows traders to amplify their exposure to price movements, potentially magnifying both profits and losses.

For example, with 10x leverage, a trader can control a position size that is ten times larger than their initial capital. While leverage can enhance potential returns, it also increases risk, as losses are similarly amplified. Therefore, it is crucial for traders to understand and carefully manage leverage when engaging in perpetual futures trading.