Trading Basics: Mastering the Terminal
Order Types, Leverage, and Risk Management Explained
Hyperliquid offers a professional-grade trading experience that mirrors centralized exchanges. However, if you are coming from Uniswap (swaps) or traditional stock investing, the concepts of Perpetual Futures and Order Books might be new. This guide breaks down the core mechanics of trading on Hyperliquid so you can execute strategies with precision.
1. The Order Book (CLOB) vs. AMM
Unlike Uniswap, where you trade against a "pool" of liquidity, Hyperliquid uses a Central Limit Order Book (CLOB).
📈 Bids (Green)
People wanting to buy at various prices
↔️ Spread
The gap between the highest Bid and the lowest Ask
📉 Asks (Red)
People wanting to sell at various prices
Why it matters:
You can be a "Maker" (providing liquidity) or a "Taker" (taking liquidity):
- • Makers: Pay lower fees (0.01%) and sometimes earn rebates
- • Takers: Pay higher fees (0.035%) for speed and guaranteed execution
2. Order Types
Understanding how to enter a trade is just as important as when.
Market Order
Action
Buy/Sell NOW at the best available price
Use Case
Panic selling, FOMO buying, or when you need immediate execution
Fee
Higher (Taker fee)
Risk
Slippage (getting a worse price than expected if size is large)
Limit Order
Action
Buy/Sell ONLY at price X or better
Use Case
Entering a trade at a specific support/resistance level
Fee
Lower (Maker fee)
Risk
The order might never get filled if the price doesn't reach your target
Stop Market (Stop Loss)
Action
If price hits X, trigger a Market Sell
Use Case
Protecting your capital. If price drops below support, sell immediately
Fee
Market fees apply when triggered
Risk
May execute at worse price during volatile moves
Take Profit (Limit)
Action
If price hits X, trigger a Limit Sell
Use Case
Securing profits automatically while you sleep
Fee
Maker fee when triggered
Risk
May not fill if price pulls back before order executes
3. Leverage & Margin Modes
Leverage allows you to trade with more money than you have. Example: With $1,000 collateral and 10x Leverage, you can open a $10,000 position.
Cross Margin
✓ DefaultAll funds in your account act as collateral for all open positions
✓ Pros
- • Flexible
- • Winning positions can offset losing ones
✗ Cons
- • One bad trade can liquidate your entire account wallet
Isolated Margin
✗ OptionalYou allocate a specific amount to a specific trade
✓ Pros
- • Safety
- • If liquidated, you only lose that allocation
✗ Cons
- • Must manually add margin to prevent liquidation
Pro Tip: We recommend beginners start with Isolated Margin to prevent "blowing up" their account.
4. Funding Rates Explained
You will see a "Funding Rate" (e.g., 0.0100%) at the top of the screen. Perpetuals have no expiry date. To keep the contract price close to the real Spot price (Oracle), funding fees are paid.
📈 Positive Funding
Longs pay Shorts
The market is bullish. Long positions are expensive to hold.
📉 Negative Funding
Shorts pay Longs
The market is bearish. Short positions are expensive to hold.
💡 Strategy
If funding is extremely high (e.g., 100% APR), holding a Long position becomes very expensive. Contrarian traders often Short high-funding coins to "farm" the funding fee while waiting for a reversal.
5. How to Read the Interface
📊 The Chart
Hyperliquid integrates TradingView charts. You can use all standard indicators (RSI, MACD, Bollinger Bands) directly in the browser.
Use these tools to identify support/resistance levels, trend strength, and overbought/oversold conditions.
📋 Position Tab (Bottom)
Size
How big your position is (in coins or USD)
Entry Price
Your average buy-in price
Mark Price
The current global price used for liquidation calculations
Liq. Price
The price where you will be liquidated. Respect this number!
Unrealized PnL
Your paper profits/losses
Realized PnL
Profits locked in (or fees paid)
6. Risk Management 101
The #1 rule of trading is survival.
Never use Max Leverage (50x)
A 2% move against you will wipe you out completely
Always use Stop Losses
Decide where you are wrong before you enter the trade
Watch Liquidation Density
Hyperliquid shows where other traders will get liquidated. Price often gravitates toward these clusters
📌 Key Principle
Your goal is not to win every trade—it's to survive. If you manage risk properly and have a positive expected value per trade, profits will follow naturally over time. Protect your capital at all costs.
Quick Reference: Beginner Checklist
- ✓Use Limit Orders when possible to save on fees (0.01% vs 0.035%)
- ✓Start with Isolated Margin and 2x-5x leverage
- ✓Always set a Stop Loss before entering any trade
- ✓Monitor your Liquidation Price and keep it 5-10% away from current price
- ✓Use Take Profit orders to lock in gains automatically
- ✓Never use more than 10x leverage until you have months of experience
Ready to apply these concepts to real trading?
Start Trading on Hyperliquid