The words, without the costume.

Start here if a lesson uses a word that went past too fast. “Next” words can wait until the first eight lessons feel easy.

45 terms

Auto-deleveragingNext

A last-resort close of a profitable position when a liquidation cannot be filled and the insurance fund is not enough.

Rare on deep bitcoin markets. More thinkable on a thin altcoin perp. If you are one of the largest winners, you are first in line. Another reason size and venue depth matter.

Bankruptcy priceNext

The price at which the posted margin would be worth exactly zero.

Venues try to liquidate you before that price, then use an insurance fund if the close is worse than expected. You should never aim at either line.

BasisNext

The gap between the futures price and the spot price.

Funding exists to pull that gap back in. A huge basis means the contract is a bad copy of the coin until funding does its work — and funding will be expensive for the crowded side.

CloseStart

Ending a position so the exposure goes away.

On MEXC you usually press Close long or Close short. On Binance one-way mode you sell to close a long, or buy to close a short. The word on the button is not the same everywhere. Read it.

COIN-MNext

A contract margined and settled in the coin, not in a stablecoin.

A bitcoin COIN-M short that makes money pays you bitcoin — while the bitcoin itself may be falling. The math feels upside down until you write it in dollars on paper. Kraken's older derivatives wallet has a coin-margined cross style too.

CollateralStart

The asset you posted as margin.

On many USDT perpetuals the collateral is a stablecoin. On coin-margined contracts the collateral is the coin itself, so a falling coin shrinks both the bet and the deposit. Kraken's Multi-M wallet accepts many coins as collateral at once.

Cross marginStart

Open trades can draw on the free cash in the whole wallet.

Liquidation sits farther away, because more cash is standing behind the trade. The other side of that deal: a bad trade can spend the wallet, not just one slice. Kraken's order form defaults to cross.

Dated futureNext

A contract with an end date.

On the end date it settles and disappears. Perpetuals skip that ending and use funding instead. Coinbase US perpetual-style contracts keep a far-off expiry so they fit US futures rules.

Effective leverageNext

Leverage right now, after price has already moved.

Kraken shows this on open derivatives. It is not frozen at the number you picked. A winner can lower it. A loser can raise it, because the same position is now backed by less cash.

Fair priceStart

MEXC's name for the mark-style price used in liquidation.

When a Binance guide says mark price and a MEXC guide says fair price, they are pointing at the same job: don't let one weird trade decide who gets closed.

Funding rateStart

A periodic payment between longs and shorts, not a fee to the exchange.

If the contract trades above the spot price, longs usually pay shorts. If it trades below, shorts usually pay longs. Binance and MEXC often do this every 8 hours. Coinbase US accrues it hourly and settles twice a day. The rate can be negative.

Hedge modeNext

A Binance setting that lets you hold a long and a short on the same contract at once.

Buttons become open-long, open-short, close-long, close-short — a lot like MEXC. One-way mode is simpler: buy and sell, one net position.

Index priceNext

A blend of spot prices from several markets.

The mark price is built from the index so one exchange's wick does not own the calculation.

Initial marginStart

The deposit required to open the trade.

A venue might ask for 10% up front. That is the same idea as 10× leverage: position ÷ deposit = 10. On Coinbase's US futures the clearinghouse sets this percent, and the ticket shows the leverage that falls out of it.

Insurance fundNext

A pool the venue uses when a liquidation fills worse than the bankruptcy price.

It exists so one trader's blow-up is less likely to be billed to other traders. It is not a refund desk for you.

Isolated marginStart

Only the cash you assigned to that one trade is at risk.

If the trade fails, the slice is lost and the rest of the wallet is left alone. The cost of that safety is a closer liquidation. Kraken has a quirk: funding on an isolated perpetual can still be charged to the general wallet.

Last priceStart

The price of the most recent trade on that order book.

It is what just happened, not necessarily the price that liquidates you. Read both numbers before you panic or celebrate.

LeverageStart

How many times larger the position is than the cash you posted.

At 5×, $100 of margin controls about $500 of coin. Gains and losses are both multiplied. Leverage does not add new money to your account. It makes each price move count for more.

Limit orderStart

An order that only fills at your price or better.

It can wait forever. It can also fill partway. It does not chase the market.

LiquidationStart

The venue closes your trade because the margin fell too low.

It is not the same as your stop order. You do not choose the fill. The price that triggers it is usually a mark price, not the last trade printed on the chart.

LongStart

A bet that the price goes up.

On a perpetual you do not have to own the coin first. You post margin and the contract pays you if price rises, and costs you if it falls.

Maintenance marginStart

The smaller deposit you must still have after the trade is open.

You can drift below the opening deposit and stay open. Cross under the maintenance line and the venue starts closing you. That is why liquidation happens before your cash hits exactly zero.

MakerNext

An order that rests on the book and adds liquidity.

A limit order away from the current price usually makes. Venues often charge makers less. MEXC has often advertised a 0% maker fee. Check the live tier. It changes.

MarginStart

The cash you post so a leveraged trade is allowed to exist.

Think of it as a deposit, not as the size of the bet. The bet can be several times larger than the deposit. If the deposit runs too low, the venue can close the trade.

Mark priceStart

A smoothed price the venue uses for liquidation and unrealized profit.

It follows an index of spot markets, not one wild trade. Binance liquidates on mark price. A last-price wick can look scary and still not liquidate you — and the reverse is also true.

Market orderStart

An order that fills now, at whatever prices are offered.

You are sure to get in or out, and unsure of the exact price. On a thin altcoin that gap can be large. That gap is slippage.

Nano contractStart

A Coinbase US future with a fixed small size, such as 0.01 bitcoin per contract.

You count contracts. Five nano bitcoin contracts are 0.05 BTC of exposure, not 5 BTC. International perpetuals usually let you type any size above a minimum instead.

NotionalStart

The full size of the position in dollars, before you divide by leverage.

$100 at 5× is a $500 notional. Profit, loss, and funding are calculated on the notional, not on the margin.

One-way modeNext

One net position per contract. Buy adds long, sell adds short or closes long.

Easier to read. Easier to click the wrong way if you meant to reduce and instead grew the trade. Know which mode the ticket is in before the size is typed.

Open interestNext

How many contracts are still open across all traders.

It is not volume. Volume counts trades. Open interest counts positions that have not been closed yet.

Perpetual futureStart

A contract that tracks a coin's price and has no real expiry.

You are not buying the coin. You are trading a ticket that follows it. A funding payment between longs and shorts keeps that ticket from drifting far from the spot price. Coinbase's US version is a long-dated future (about five years) with funding added so it behaves like a perpetual.

Portfolio marginNext

An advanced mode that looks at the whole book of positions together, and may ask for less margin when they offset.

Binance and others offer it to larger or approved accounts. Offsets can vanish in a crash when 'different' coins fall together. Not a beginner setting.

Realized P&LNext

Profit or loss locked in because you closed (or were closed).

Fees and funding are part of what you actually keep. The chart's price move is only the middle of the story.

Reduce-onlyNext

A switch that lets an order shrink a position but not grow one.

Use it on exits. Without it, a 'close' click in the wrong mode can open a new trade in the other direction. Binance shows this switch. It matters most in hedge mode.

Rollover feeNext

Kraken's clock for spot margin: a carrying charge for the borrowed coins, often every four hours.

This is not perpetual funding. Spot margin is a loan. Perpetual funding is a payment between traders. They both cost money to hold a position. They are not the same product.

ShortStart

A bet that the price goes down.

Price down is a gain. Price up is a loss. Beginners get this backward because everyday shopping only trains the 'buy low' direction.

SlippageStart

The gap between the price you clicked and the price you actually got.

Thin books and market orders make it worse. A stop in a fast market can slip too.

SpotStart

Buying or selling the coin itself, for delivery into your wallet.

If you buy spot bitcoin you own bitcoin. A 10% move changes your coin's value by about 10%. There is no leverage liquidation on a plain spot buy.

Spot marginStart

Borrowing cash or coins to buy or sell more spot than you have.

You pay interest on the loan. Kraken and Binance offer versions of this. Coinbase withdrew US retail spot margin years ago. MEXC does not offer it — their leverage is in perpetuals.

SpreadNext

The gap between the best buy offer and the best sell offer.

You cross it when you take a market order. On a quiet altcoin the spread can cost more than the trading fee.

Stop orderStart

An order that tries to exit if price reaches a level you chose.

It is a request, not a guaranteed price. In a fast move it can fill worse than the stop, or not how you pictured. It is still the tool that states your loss in advance. Liquidation is not a substitute for it.

Take-profitNext

An order that exits if price reaches a gain you chose.

Same family as a stop, pointed the other way. It does not make the idea correct. It only makes the exit less emotional.

TakerNext

An order that matches immediately against someone else's resting order.

Market orders take. Takers usually pay more. A 'cheap' trade that crosses the spread and pays taker fees is less cheap than the headline rate.

Unrealized P&LStart

Profit or loss that is still inside an open trade.

It changes every time the mark moves. It is not spendable cash until you close, and a venue may already count it when deciding how close you are to liquidation.

USDT-M / USDⓈ-MStart

A Binance contract margined in a stablecoin. Profit and loss are in that stablecoin.

USDⓈ-M is the family name. USDT-M and USDC-M are the usual members. MEXC's perps are mostly this style, in USDT. You are not holding the coin.