Leverage allows you to control a large position with a small amount of capital. Example: With 10x leverage, $100 can control $1,000 worth of Bitcoin. However, it also increases your risk of liquidation.

Long (Buy): Profit when price goes UP.
Short (Sell): Profit when price goes DOWN.

If the market moves against your position and your margin balance falls below the maintenance requirement, your position is automatically closed (liquidated) to prevent further loss.

Periodic payments between longs and shorts to keep the perp price close to the spot price. Positive rate = Longs pay Shorts.