What are futures?

You deposit 1000 USDT. You open a position for 5000 USDT. That's 5x leverage.

The market drops by 20%. Your collateral burns out. The position is liquidated.

This is not the worst-case scenario; it's just the mechanics of futures.

Here's what you need to understand before trading them.

1. Leverage increases your position, but not only the profit potential.

A position with 5x leverage requires a 20% move against you to liquidate your collateral. With 10x leverage, it's enough to be 10%.

The higher the leverage, the less movement is needed for liquidation. This is not a warning; it's mechanics.

2. The margin level is your own funds divided by the used margin.

When this ratio falls below the minimum requirement, a margin call occurs or the position is automatically closed.

Losses are limited to your collateral. The position is automatically closed when the liquidation level is reached.

3. What most traders overlook: leverage is not static.

If the market moves in your favor, your capital grows relative to borrowed margin, and the effective leverage decreases, making the position less risky.

If the market moves against you, your effective leverage increases. The same position becomes more dangerous as losses grow.

4. In perpetual contracts, there's an additional layer: funding rates.

Depending on market conditions, you may pay or receive periodic fees for holding an open position.

Over time, this increases or decreases your effective costs.

❗ Futures are a serious instrument. Leverage is both an advantage and a risk.