A long position on a perpetual future makes money when the price rises; a short makes money when it falls. That much is intuitive. The parts that surprise beginners are the arithmetic around it: how the same price move looks on the position and on the collateral, why a fall and the rise that undoes it are different percentages, and how fees and funding come out of every result. This guide works each of those through with invented numbers you can check by hand.
One formula for each direction
Hyperliquid’s contract specifications list the instrument type as “Linear perpetual” and the contract as “1 unit of underlying spot asset”. For a linear contract like this, profit and loss are a coin size multiplied by a price change. This guide works in dollars.
- long P&L = size × (exit price − entry price)
- short P&L = size × (entry price − exit price)
Size is measured in coins. Notional, the position’s value, is size × price. Inverse contracts margined in the coin itself use different formulas, so confirm the contract type before reusing these lines.
Worked example: the same move, both sides
SOL is $150 in this invented example. Two traders each open a 2 SOL position, so each has $300 of notional. SOL then moves to $162.
| Long 2 SOL | Short 2 SOL | |
|---|---|---|
| Entry | $150 | $150 |
| Exit | $162 | $162 |
| Price P&L | gain of 2 × (162 − 150) = $24 | loss of 2 × (162 − 150) = $24 |
The long’s gain is the short’s loss. Before costs, price P&L between the two sides nets to zero. Funding does not change that total either: Hyperliquid notes that “Funding is purely peer-to-peer and no fees are collected on the payments.” Trading fees are the part that leaves the pair, which is why traders as a group start slightly behind.
Return on position vs return on collateral
Suppose the long trader posted $60 of collateral for the $300 position. Hyperliquid states that “The margin required to open a position is position_size * mark_price / leverage”. With $300 of notional and $60 of collateral, that formula corresponds to 300 ÷ 60 = 5× leverage.
- Return on the position: 24 ÷ 300 = 0.08, or 8%, the same as SOL’s move from $150 to $162.
- Return on the collateral: 24 ÷ 60 = 0.4, or 40%.
The short trader with the same $60 collateral is down 40%. At 10× leverage the collateral would be $30, and the same 8% adverse move would cost 24 ÷ 30 = 0.8, or 80%, of it. Leverage does not make the price move further. It makes the same dollar move a larger share of the money behind the position.
The figure uses a different invented size, $2,000 of exposure, to make the same point: a 1% adverse move is a $20 loss whatever the leverage label, while the collateral behind it differs. The leverage vs position size guide develops that comparison.
Percentages are not symmetric
A fall needs a larger percentage rise to recover, because the rise starts from a smaller number.
| Move | Price path | Percentage change |
|---|---|---|
| Up | 100 → 125 | +25% |
| Back down | 125 → 100 | −20% |
| Down | 100 → 80 | −20% |
| Back up | 80 → 100 | +25% |
Check the second row: the fall of 125 − 100 = 25 is 25 ÷ 125 = 0.2 of the higher price, or 20%. The fourth: the rise of 100 − 80 = 20 is 20 ÷ 80 = 0.25 of the lower price, or 25%. The SOL example behaves the same way: a move from $150 up to $162 is 8%, but the move back down is a smaller percentage, because it starts from the higher price. The same effect applies to an account balance, where a 50% drawdown needs a 100% gain to return to the starting value.
Costs come out of every result
A complete result has three parts: price P&L, trading fees and funding.
The fee rate below comes from Hyperliquid’s fee schedule as checked for this article. Its fees page refers to “the 0.045% baseline fee for validator-operated perps”. This guide assumes that 0.045% is the rate charged on each fill. Your tier, discounts and the schedule itself can differ, so treat the rate as an input to replace. Assume both orders are taker fills.
For funding, Hyperliquid states that “the funding payment at the end of the interval is position_size * oracle_price * funding_rate”. Its funding page states that when the contract trades above the oracle price, “the funding rate will be positive, and the long position will pay the short position.” Hyperliquid derives the rate from a premium and an interest component, and its funding page adds that “funding is paid every hour at one eighth of the computed rate for each hour”, so real hourly payments move every hour. This guide does not model that formula. It simply assumes that each hourly funding payment equals 0.002% of the position’s notional, for 24 hours, with the oracle price staying near the $150 entry. As a decimal, 0.002% is 0.002 ÷ 100 = 0.00002.
| Item | Long 2 SOL, 150 → 162 | Short 2 SOL, 150 → 162 |
|---|---|---|
| Price P&L | +$24.00 | −$24.00 |
| Opening fee: $300 × 0.045% | −$0.135 | −$0.135 |
| Closing fee: $324 × 0.045% | −$0.1458 | −$0.1458 |
| Funding: $300 × 0.00002 × 24 | −$0.144 | +$0.144 |
| Net | +$23.5752 | −$24.1368 |
Each cost line is a short multiplication. The opening fee is 300 × 0.00045 = 0.135 dollars. The closing fee is 324 × 0.00045 = 0.1458 dollars, because the exit notional is 2 × 162 = 324 dollars. The funding is 300 × 0.00002 × 24 = 0.144 dollars. For the long, the net is 24 − 0.135 − 0.1458 − 0.144 = 23.5752, about $23.58. For the short, the net loss is 24 + 0.135 + 0.1458 − 0.144 = 24.1368, about $24.14. The funding line is an approximation: the venue converts size to notional with its oracle price at each hourly settlement, and real rates change every hour. On a $24 gain the costs look small. They matter when trades are frequent, when targets are small, or when a position is held for days while funding stays high. The trading fees guide and the funding-rates guide treat each cost in more depth, and the fees and funding worksheet runs a fixed-rate estimate.
The break-even move
If both the entry and the exit are taker fills at 0.045%, a round trip costs about 0.045% + 0.045% = 0.09% of notional, as long as the entry and exit notionals are similar. Maker fills or a different tier change that total. Near the $300 entry notional, the two fees are about 300 × 0.00045 × 2 = 0.27 dollars. Spread across the 2 SOL position, the exit has to be 0.27 ÷ 2 = 0.135 dollars per SOL above entry. The break-even exit is therefore about 150 + 0.135 = 150.135, or roughly $150.14, before funding. A small target on a short timeframe has to clear that hurdle before anything is left over, which is one reason very short-term trading is harder than a chart makes it look.
Two directions, two risk shapes
- A long’s price loss is limited by the asset’s price reaching zero, although margin rules close the position long before that.
- A short’s price loss grows as the price rises, with no natural ceiling; margin rules and liquidation are what stop it.
- Sharp upward squeezes hurt shorts quickly, and sharp liquidation cascades downward hurt longs quickly.
Neither side is safer in itself. Risk comes from size, leverage and the distance to the point where the idea is wrong. Hyperliquid’s liquidation documentation states that “A liquidation event occurs when a trader’s positions move against them to the point where the account equity falls below the maintenance margin.” That is why the position sizing guide sizes a trade from a planned loss rather than from the leverage setting.
Practise the arithmetic first
Pick a current price, write down an invented long and short of the same size, and compute both P&Ls, the fees at your venue’s current tier and a funding estimate. Compare your numbers with the venue’s own trade history only after you have written them down. The goal is to know what a move means for your collateral before you are looking at a live position.
Educational material only. All prices, sizes and rates are invented or assumed for arithmetic; they are not quotes, forecasts or recommendations.