Long, short et effet de levier

There are only two directions in trading. A Long position profits when price rises; a Short position profits when price falls. Everything else — entry timing, exits, sizing — sits on top of that binary choice.

Spot vs perpetual

A Spot trade is the simplest: you buy the asset, you own the asset, you can sell it later. No expiry, no borrowing, no third party between you and the position. A Perpetual contract (perp) is a derivative — you do not own the underlying, you hold a contract whose value tracks it. Perps allow shorting and leverage, and they introduce one new mechanism in exchange: Funding, a small periodic payment between longs and shorts that keeps the perp price tethered to spot.

What leverage does

Leverage lets you control a position larger than your account balance, by borrowing the difference from the exchange. With 5x leverage, $1,000 of your equity controls a $5,000 position. A 1% move in your favour returns 5% on your equity. A 1% move against you costs 5% of your equity. The math is symmetric until it isn't — see liquidation, below.

Liquidation

Because you borrowed money to open the position, the exchange will close it the moment your remaining Equity can no longer cover the loss — this is Liquidation. At 5x leverage, a 20% adverse move (roughly, before fees and the maintenance margin) wipes out the entire collateral. At 10x, 10% does it. At 20x, 5%. Compare that to the daily range of the asset you trade. Most crypto liquidations are not bad luck; they are predictable consequences of leverage chosen without reference to volatility.