Leverage, Margin, and Liquidation
When an Order node opens a position with leverage, the exchange can close that position for you if the market moves far enough against it. This page explains how that works, in plain terms, so the leverage and size you set are deliberate.
Synchronicity is currently on Hyperliquid testnet, so a position is backed by test funds with no real value. The mechanics below are Hyperliquid’s own, and they are exactly what will govern your real funds at the mainnet launch, so testnet is the place to learn them.
Liquidation is a forced close you cannot undo. Once your position reaches its liquidation price, the exchange closes it automatically and the loss is locked in. Choose leverage and size you would be comfortable holding through a sharp move.
Leverage
Leverage is a multiplier. At 10x, $100 of margin controls a $1,000 position, and the gain or loss on that full $1,000 lands on your $100. It scales both directions equally.
You set leverage inside the Order node:
| Setting | Value |
|---|---|
| Minimum | 1x |
| Default | 10x |
| Maximum | Set per asset by Hyperliquid, up to 40x |
The maximum is per market, not one platform number. Hyperliquid caps each asset between 3x and 40x. The highest-cap markets, such as BTC, allow 40x, and the Order node clamps your input to that asset’s limit.
The margin you post to open a position follows one rule:
margin to open = position size / leverageA $1,000 position at 10x needs $100. The same position at 40x needs $25. Higher leverage frees up capital, and it also means a smaller move against you wipes that capital out. That trade-off is what the rest of the page is about.
Margin
Margin is the collateral backing an open position. Two numbers matter:
- Initial margin is what you post to open the position (
position size / leverage). - Maintenance margin is the smaller amount you must keep in it to hold it open. As the position loses, your equity falls toward this floor. Reach it, and you are liquidated.
On Hyperliquid, the maintenance margin is about half the initial margin at the asset’s maximum leverage. In practice that is roughly 1.25% of the position on a 40x market, up to about 16.7% on a 3x market. The exact figure per market is set by Hyperliquid.
Cross and isolated margin
Hyperliquid runs a position in one of two margin modes, and the mode is set on your Hyperliquid account, not in the Strategy Builder. You do not pick a mode per strategy. A deployed strategy’s order uses whichever mode your account is in at the moment it runs, so if you switch modes before the order executes, the order follows the new mode.
- Cross margin shares one pool of collateral across your positions. It is more capital-efficient, and a liquidation can draw on your whole balance, not just the margin behind one trade.
- Isolated margin walls off a set amount of margin for a position. A liquidation there is limited to that position and leaves the rest of your account untouched.
Hyperliquid sets the rules for switching modes and what each one requires. See the Hyperliquid documentation for the specifics.
Liquidation
Liquidation is the exchange closing your position because your equity has fallen to the maintenance margin. It is automatic, and once it triggers you cannot reverse it.
A few things worth knowing:
- It watches Mark Price, the exchange’s fair-value price, not the last trade (see Data Feeds). The mark reaching your liquidation price is enough.
- Every position has its own liquidation price. The exchange closes at or near it, and any margin left over is returned to you.
- In a sharp move where the position cannot be closed cleanly, a backstop liquidator takes it over instead. In that case the maintenance margin is kept rather than returned, which is the cost of being closed the hard way.
The higher your leverage, the smaller the move it takes to get there:
| Leverage | Approximate move against you before liquidation |
|---|---|
| 2x | ~50% |
| 5x | ~20% |
| 10x | ~10% |
| 25x | ~4% |
| 40x | ~2.5% |
These are rough. Fees and the maintenance-margin buffer bring the real liquidation point slightly closer than the simple figure suggests. Always read the exact liquidation price shown on your position.
Large positions are closed in steps, not all at once. On Hyperliquid, a position above a size threshold (10,000 USDC on testnet, 100,000 on mainnet) is liquidated a portion at a time, with a short pause between attempts.
How to avoid liquidation
The goal is to close on your terms, before the exchange closes for you. Three levers do most of the work:
- Use lower leverage. The most direct lever. Halving leverage roughly doubles the move a position can take before it is liquidated.
- Set a stop loss. A stop loss closes the position at a price you choose, ahead of the liquidation price. It is the main way a strategy caps its own downside. Set it in the Order node. See Configure a Stop Loss.
- Watch your size. A larger position sits closer to its maintenance floor. Read size and leverage together, not separately.
Testnet is the free place to learn this. Deploy with leverage, watch where a position’s liquidation price sits, and see how a stop loss changes it, before any of it is real money on mainnet.