What is Leverage?

Leverage is trading with more exposure than you have capital: posting collateral and opening a position several times larger. Ten times leverage on a thousand dollars controls ten thousand dollars of exposure, so a ten percent move in your favour doubles the collateral and a ten percent move against it wipes it out. The multiplier works identically in both directions.

On exchanges and perp DEXs, leverage comes through margin. The collateral is the margin, the position size divided by the margin is the effective leverage, and the liquidation price is the point where losses have consumed enough margin that the venue closes the position by force. Funding payments, fees and price all move that distance while you hold.

The number people watch is the wrong one. A position card shows leverage as chosen at entry, but effective leverage changes with every tick: a winning position is less leveraged than it was, a losing one more. Across several positions on one account the meaningful figure is account-level: total exposure against total collateral, and how far the nearest liquidation sits.

A tracker earns its keep here by totalling exposure across venues. TrueHold reads perp positions on Hyperliquid by address, on Lighter through a read-only token and futures on connected exchanges by read-only key, shows entry, mark, size and liquidation distance per position, and counts the exposure into one book, which is the number that decides whether the whole portfolio is actually hedged.

Venues differ in how margin is shared. Isolated margin ties collateral to one position, so a liquidation there cannot touch the rest of the account; cross margin lets every position draw on the same pool, which delays liquidation but means one bad trade can consume all of it. Knowing which mode each account runs is part of knowing your real exposure.

One more habit: write down the liquidation price of every leveraged position somewhere you will see it. Venues show it, but only inside their own screens, and the danger of leverage is rarely one position; it is three positions on three venues that all sit closer to the edge than the sum of their cards suggests.