Guides: the arithmetic behind leveraged and sized trading

Short explainers that sit behind our calculators: what a liquidation price is, what funding costs, why sizing formulas break down, and what a market order really costs.

• What a liquidation price is and how it is set

  Why a leveraged position is closed, how the price is calculated, and why your exchange may show a different number.

• Isolated vs. cross margin: where the risk sits

  The same position liquidates at very different prices depending on the margin mode. A worked comparison.

• What funding rates cost per year

  A funding rate of 0.01% looks like nothing and adds up to about 11% a year. How to read it, and when you are paid instead.

• Why full Kelly is a trap in practice

  The Kelly formula sizes a bet for the fastest growth, and a small error in the win rate turns it into a losing bet. A simulation of the swings.

• What a market order really costs

  Fee, spread and depth: why the price you see is not the price you get, with an order book worked through.

• What 1% a day would really mean

  One percent a day compounds to 37.8 times in a year. The arithmetic, the costs and the size limits behind claims like it.

How to use these guides

Each guide works through its numbers with the matching calculator, so you can replace our example with your own. They are educational: nothing here is investment advice, and leveraged products can lose your whole margin. The evidence we have from backtests and live experiments is in our research, and every formula is in the calculators.