Getting to Know Leverage, Long, and Short Trades

Leverage, Long and Short Trades

Whether it’s your first time trading or you’ve only swapped tokens in DeFi, this guide will walk through what it really means to use leverage, open a long position, or go short on an asset. You’ll learn how these tools work, why they can boost your trading potential, and what risks to watch out for, so you can trade smarter and more confidently from day one.

Leverage Basics.

Leverage

Leverage lets traders use borrowed funds to open bigger positions than their actual balance allows.   

On Morpher, this means gaining more “buying power” but it also makes every price move much more impactful. For instance, with 5x leverage, a small price drop can quickly wipe out your starting funds because your gains, and losses are multiplied.

Main Risk: With leverage, losing just a portion of your trade can lead to losing your entire deposit, especially during volatile markets or if you’re not watching your positions.

Tip: Track your liquidation level (the price at which your position closes automatically) and consider setting stop-losses to help protect your funds.

Trading Long.

Trading Long

“Going long” means buying an asset because you think its price will increase. When you “open a long,” you profit if the asset’s price goes up, but lose if it goes down.

Main Risk: If the asset drops in value (instead of rising), you can lose part or all of your money, especially with leverage involved.

Tip: Only use leverage you’re comfortable with, and keep an eye on your position, don’t set it and forget it.

Trading Short.

Trading Short

“Going short” means betting that an asset’s price will fall, so you can “sell first and buy later”.

This can be a useful strategy if you think a market is headed down, but it’s riskier for beginners because losses can be much larger if prices rise unexpectedly.

Main Risk: If the asset price jumps, your losses can grow quickly even beyond your starting amount.

Tip: Shorting is generally best left for users with some trading experience. Always track your position, especially when using leverage.

Trading with leverage, longs, and shorts can open up a world of new opportunities but they also come with new responsibilities. The more you understand how these tools work, the more confidently you can navigate markets and manage your risk.   

Start small, learn how price movements affect your trades, and take advantage of the resources available on Morpher and Facaster.

Every experienced trader started with the basics so take your time, stay curious, and build your skills step by step.

Got questions?

Hit us up in the /morpher channel in Farcaster

Updated on: 21/10/2025

Was this article helpful?

Thank you!