Trading on Hyperliquid resembles other exchanges or markets, yet its fully decentralized architecture introduces unique nuances. In this article, we’ll explore the top 5 mistakes newbies make when trading perpetual futures (“Perps”) on Hyperliquid and how to avoid them.
Hyperliquid is a fully decentralized derivatives protocol running on its own high-performance blockchain, offering on-chain margin and sub-second settlements.
Hyperliquid Perps vs Hyperliquid Spot
Hyperliquid offers two main markets – Spot and Perps; for a detailed walkthrough, see our Beginner’s Guide to the Hyperliquid trading.
- Spot behaves like a standard swap: you exchange one asset for another at the prevailing market rate.
- Perps (perpetual futures) let you open leveraged positions – up to 40× – amplifying both potential gains and losses. In Q2 2025, perps made up roughly 70 % of Hyperliquid’s $300 million average daily volume.
Now, let’s review the top 5 mistakes when trading perps on Hyperliquid.
1. Failure to Define a Trading Strategy Before Trading Perps on Hyperliquid
The key to profitable Perps trading is simple: your aggregate winning trades must more than cover your losing trades, ideally by at least a 2:1 margin. Every trader needs a clear, repeatable strategy for opening and closing positions.
Core components of a basic trading strategy:
- Entry criteria: Specific signals or triggers that prompt you to open a position (for example, indicator crossovers, on-chain volume spikes, macro news, or recurring patterns like Monday momentum).
- Exit plan: Defined profit targets and stop-loss levels for each trade. Aim for a risk/reward ratio of at least 1:2 - risk $1 to make $2 - to maintain a positive expectancy over time.
Keep a simple trade journal (spreadsheet or note-taking app) with columns for date, pair, direction, entry price, exit price, size, profit/loss, and strategy rationale. Reviewing your history monthly helps you identify which signals work and where you need to adjust risk controls.
If you don’t have a trading strategy, it’s like trying to build a large house without a plan for what the house should look like, what it should contain, or the order of construction: roof first or foundation?
2. Copying Perps Whale Trades on Hyperliquid
Hyperliquid’s on-chain order book lets anyone view the largest Perps positions in real time - unlike most CEXes, where whale activity is hidden. This transparency fuels FOMO: seeing a $5 million long might tempt you to mirror that trade.
Perps Whale Trades on Hyperliquid Generate Million-Dollar Profits, and Anyone Can View Their Trades - Source: Hyperliquid
Why this is a mistake:
- We don’t know each whale’s strategy or risk parameters. A $5 million position may fit their 1% portfolio risk, but would blow up a small account.
- Whales often scale in and out across multiple entries - you’d enter late and miss optimal pricing.
- Some whales treat Perps as speculative bets, not disciplined trades. Copying “gut-feel” moves ignores proper risk controls.
Key takeaways:
- Use whale data only as one signal among many - combine with your own indicators.
- Always calculate position size based on your account equity and max loss tolerance.
- Set stop-loss levels before entering, even if a whale’s trade shows “infinite conviction.”
3. Cross vs Isolated Margin on Hyperliquid Perps: Which one to Choose?
Many beginners opt for cross margin chasing higher returns – but this often ends in disaster. With cross margin, all your positions draw from a single collateral pool, making precise risk management difficult. A sharp 1–2 % move against any position can wipe out your entire balance, even if 4 of 5 trades were profitable.
Why Isolated Margin Is the Better Choice for New Traders
- Known Maximum Loss: You assign a fixed amount of collateral per position, so your worst-case loss is capped at that amount.
- Individual Position Control: Each trade has its own liquidation price, making stop-loss and take-profit orders easier to set and monitor.
- Simplified Risk Calculations: You can calculate your liquidation price before you enter a trade, avoiding surprise blow-ups.
Note: If you only ever trade one pair (e.g., BTC/USDC), the difference between cross and isolated margin is minimal. But as soon as you hold multiple positions, isolated margin prevents one bad trade from liquidating your entire account.
4. Ignoring Hyperliquid Perps Fees
Many users see “zero gas fees” and assume there are no costs on Hyperliquid Perps – but that only refers to blockchain gas. Protocol fees still apply and can eat into profits, especially if you scalp or swing trade large positions. Also note that you can reduce those fees by staking HYPE in your HYPE wallet.
Key fees to watch
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Market vs Limit orders
- Market orders incur roughly 0.06% fee on entry and 0.06% on exit (total 0.12%)
- Limit orders incur roughly 0.03% on entry and 0.03% on exit (total 0.06%)
- If you place 6 trades per day at $50,000 each, using market orders costs ~$360 over 24 hours vs ~$180 with limit orders.
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Funding rates
- Settled every 8 hours to balance longs vs shorts
- Funding typically ranges from –0.02% to +0.05% per interval
- On a $100,000 long position held 24 hours at +0.04% funding, you’d pay $120 in funding fees.
At times, funding rates on Hyperliquid can reach over 200% annually. - Source: Hyperliquid
When to account for Funding
- You’re trading large positions (> $50,000)
- You hold positions longer than one day
- You trade highly volatile pairs (e.g. low-liquidity altcoins)
Funding rates can swing wildly – check the live funding chart before entering and factor it into your profit targets and stop-loss levels.
5. Control the Game: Trading Perps on Hyperliquid With a Clear Head
Many traders ignore their mental state - even one impulsive trade outside your plan can wipe out profits from an entire winning streak. According to industry data, 80% of retail crypto traders lose their balance within three months due to emotional decisions, according to a Special SEC report.
Key measures to keep emotions in check:
- Position size - Risk no more than 2%-5% of your total equity per trade. On a $10 000 account, that means a $200 max risk. Too small a position feels trivial and invites overtrading; too large a position triggers fear and early exits.
- Take profit and stop loss - Set TP/SL immediately after opening a position based on your risk/reward ratio (for example, risk 1% to target 2%). Once your PnL moves, emotions spike and make manual exits unpredictable. Predefined levels protect profits and prevent losses during internet outages or platform issues.
- Regular self-review - At least once a week, review your trades and note any emotional patterns (overtrading after a loss, holding losers too long, revenge trading). If you spot a bad habit, pause trading, refocus on your strategy rules, and only return when you’re mentally grounded.
Get Started Trading Hyperliquid Perps Using Gem Wallet
Gem Wallet is a privacy-first, open-source wallet that shares Hyperliquid DEX’s ideology - no registration, phone number, or email required. We understand the challenges new traders face on Hyperliquid Perps, which is why we’ve integrated Perps directly into Gem Wallet with a unique interface and custom code to ensure easy yet powerful access. In Gem Wallet, we’ve addressed the most common mistakes and difficulties users encounter, crafting ultimate features to make your Perps experience smooth and professional:
Trade Hyperliquid Perps right in your Gem Wallet. - Source: Gem Wallet
- Convenient, consolidated market data at your fingertips
- Advanced open position monitoring
- Quick, in-app position management
- Access to seamless DEX swaps across thousands of assets
- And much more
Join Gem Wallet today and unlock a seamless Hyperliquid Perps Experience!
