Perps Basics
The four concepts every perps trader needs — price (mark vs oracle), margin, leverage and liquidation — explained plainly for Ritdex on Hyperliquid.
Before you place a leveraged trade, it helps to understand four things: how price is decided, what margin is, how leverage works, and when a position gets liquidated. Everything here applies to every market on Ritdex, powered by Hyperliquid.
Price: mark vs oracle
A perp tracks an underlying asset without ever expiring. Two prices matter:
- Mark price — the fair price Hyperliquid uses for your PnL and liquidation checks. It blends the order book with an oracle so a brief wick can't unfairly liquidate you.
- Oracle price — an external reference feed for the underlying asset.
Your unrealized profit and your liquidation trigger are always measured against the mark price, not the last trade.
Margin
Margin is the collateral (USDC) you commit to a position. Two modes decide how it's shared:
Margin and PnL are shared across all open positions on the account. Efficient use of capital, but a liquidation can affect every position at once.
A fixed amount of margin is allocated to a single position. Margin and PnL are not shared — only that position is at risk if it's liquidated.
- Cross margin — all positions share one margin pool. Capital-efficient, but a loss on one position can pull margin from the whole account.
- Isolated margin — a fixed amount of margin is locked to a single position. Only that margin is at risk; the rest of your account is ring-fenced.
Pick per trade: Isolated to cap the downside of a risky position, Cross for efficiency across many positions.
Leverage
Leverage lets your margin control a larger position:
Position size = Margin × Leverage
At 20×, $100 of margin opens a $2,000 position. Leverage is set per market, within Hyperliquid's risk limits — deeper, more liquid markets allow higher maximum leverage.
Higher leverage means a smaller adverse move wipes out your margin. A 20× long is liquidated after roughly a 5% drop; a 50× long after roughly 2%. Leverage multiplies losses exactly as much as gains.
Liquidation
If the mark price moves against you far enough that your margin can no longer cover the position, Hyperliquid liquidates it to protect the system.
- Your liquidation price is shown before you confirm a trade and on the open position.
- Isolated: only that position's locked margin is lost.
- Cross: the liquidation can draw on your whole account's available margin.
How to stay safe:
- Keep a margin buffer — don't trade at max leverage.
- Add margin (Isolated) or reduce size to push the liquidation price further away.
- Use a stop-loss so you exit on your terms, not the exchange's (Opening a Position).
Funding rate
Funding is a small payment exchanged between traders — not a Ritdex or Hyperliquid fee — roughly hourly, keeping the perp price tied to the underlying. When funding is positive, longs pay shorts; when negative, shorts pay longs. The live rate and countdown appear in the market header.
Ready to trade? Continue to Opening a Position, or see the full market walkthrough in Perps Trading. Every charge is listed on the Fees page.