Trading Fundamentals
Understand Spot, Perps, margin modes, pricing and HIP-3 markets before trading size.
This page covers the exchange mechanics that affect risk, PnL, liquidation behaviour, and protection triggers.
Spot vs Perpetuals
| Aspect | Spot | Perpetuals |
|---|---|---|
Asset Ownership | You buy or sell the actual asset and own it directly. | You trade a contract tied to price; you do not own the asset itself. |
Direction | Directional position comes from holding or selling the asset. | You can go Long or Short. |
Expiry | Standard spot ownership model. | No expiry date. |
Holding Behaviour | Transferable asset position. | Position can be held while paying or receiving funding. |
Leverage | Typically unlevered spot position in this context. | Uses leverage, subject to market leverage caps. |
Funding | No funding payment. | Funding aligns perp pricing with the underlying market. |
Cross vs Isolated Margin
| Margin Mode | Practical Effect |
|---|---|
Cross Margin | Default on Hyperliquid. Collateral is shared across eligible cross positions, improving capital efficiency but allowing losses in one cross position to affect wider account state. |
Isolated Margin | Risk is confined to a specific position, which is often cleaner when testing a new market, using higher leverage, or trading a less familiar instrument. |
Some Hyperliquid assets are also Strict Isolated, such as pre-launch and most HIP-3 markets. In this mode, margin cannot be removed once allocated.
Which Price Matters
| Price Type | Primary Use |
|---|---|
Oracle Price | Computes funding. |
Mark Price | Drives margining, unrealised PnL, liquidations, and TP/SL triggers. |
Last Traded Price | Useful for chart context, not primary risk reference. |
When you are managing open risk, use Mark Price as the operational reference. This is the price that matters for liquidation logic and for understanding why PnL or protection behaviour changed even when the visible last trade did not move much.
Funding
Funding is exchanged between longs and shorts in perpetual markets.
| Funding Condition | Typical Flow |
|---|---|
Perp trades rich to underlying reference | Longs usually pay shorts. |
Perp trades cheap to underlying reference | Shorts usually pay longs. |
On Hyperliquid, the funding formula is based on an 8 hour rate, but funding is paid hourly at one eighth of the computed rate.
PnL, Margin, and Liquidation
Keep these relationships in mind while trading:
- Unrealised PnL is mark-price based.
- Margin pressure changes as mark price, leverage, and collateral change.
- Liquidation thresholds are driven by mark price and margin state, not by chart context alone.
- TP/SL triggers also use mark price, even though final fill quality depends on order type and liquidity.
Keep this page handy alongside Order Types and Troubleshooting.
HIP-3 Markets
Hyperliquid supports permissionless builder-deployed perps through HIP-3. In these markets, the deployer defines the oracle and contract specifications and operates the market, including oracle prices, leverage limits, and settlement if needed. Each HIP-3 perp dex has independent margining, order books, and deployer settings.
| HIP-3 Detail | Practical Note |
|---|---|
Margin Mode at Launch | HIP-3 is isolated-only at launch. |
User Fee Profile | HIP-3 user fees are 2x standard validator-operated perp fees. |
Discount Handling | Usual fee discounts still apply. |
Risk Review | Tagged builder markets should be reviewed carefully before trading size. |