How to Open a Leveraged Long or Short Position on GMX V2

Opening a position on GMX V2 means choosing not just direction and leverage, but which asset backs it, longs and shorts use different collateral by default, a detail that trips up traders coming from Hyperliquid’s more uniform margin system.

This guide is part of TradeOnDEX’s GMX how-to series within Perpetual Futures, and assumes your wallet is already connected and funded.

Disclosure: TradeOnDEX may earn a commission from links to GMX on this page, at no extra cost to you. Full details at the end of this article.

What backs a GMX V2 position, and why it differs by direction

For a long position, GMX uses the index token itself (the asset you’re going long) as collateral, if you pay in a different token, GMX swaps it into the index token first. For a short position, GMX requires a stablecoin (typically USDC) as collateral instead, swapping other tokens into it if needed.

This means for you, concretely: a long ETH position backed by ETH collateral has a different risk profile than the same directional bet backed by a stablecoin, your collateral’s own price movement interacts with your position’s P&L, not just the index price.

GM pools: the liquidity behind every trade

Every GMX V2 market is backed by a GM pool, a market-specific liquidity pool combining an index token and a stablecoin. This pool is what supplies the actual liquidity and counterparty side to leveraged trades in that market, similar in spirit to Hyperliquid’s HLP vault but organized per-market rather than as one platform-wide pool.

How to open a position, step by step

1. Go to the Trade page and select Long or Short for your chosen market.
2. Choose your pay token, GMX auto-swaps if it isn’t the required collateral type for that direction.
3. Set your leverage using the slider or manual input, up to a maximum of 100x depending on the market.
4. Review your position size, entry price, and liquidation price before confirming.
5. Confirm the order.

With manual leverage off, GMX derives your leverage from the ratio between your margin and position size; toggling it on lets you set leverage directly and adjusts size or margin accordingly.

Risk: what’s specific to GMX’s collateral model, and what isn’t

Collateral-in-index-token longs carry a double exposure worth understanding clearly. If you’re long ETH using ETH as collateral, both your position’s P&L and your collateral’s own value move with ETH’s price, this can compound gains, but it also means your margin cushion shrinks faster in a downturn than a stablecoin-collateralized equivalent would.

High leverage mechanically shrinks your buffer before liquidation, the same arithmetic covered in the Hyperliquid liquidation guide. Doubling leverage roughly halves the adverse price move needed to reach your liquidation threshold, this isn’t platform-specific, it’s true of leveraged perpetuals generally.

GMX V1 suffered a real $42 million exploit in July 2025, involving a re-entrancy vulnerability combined with oracle price manipulation. GMX has stated the exploit was confined to V1 and did not affect V2’s markets, liquidity pools, or the GMX token. Still, it’s a documented reminder that smart contract and oracle risk are real, ongoing categories, not hypothetical ones, even on an established, previously-audited platform.

A GM pool’s liquidity depth affects your execution, similar to order book depth on an order-book DEX. A thinly-liquidity market can mean more price impact on a large position, even without the platform itself doing anything wrong.

Long vs. short collateral at a glance

See it for yourself

Try a small position first, using manual leverage off so GMX derives it from your margin and size, to see how the collateral and liquidation price fields respond before committing meaningful capital. You can review the trade panel directly at gmx.io.

Frequently asked questions

Do I need to hold the index token to open a long position?

No, GMX will automatically swap your pay token into the required index token collateral if it isn’t already that asset.

What’s the maximum leverage on GMX V2?

Up to 100x, depending on the specific market; actual available leverage can be lower for less liquid markets.

Did the 2025 GMX exploit affect V2?

GMX has stated the exploit was confined to V1 and did not affect V2’s markets, liquidity pools, or the GMX token, still worth treating as a reminder that smart contract risk is ongoing, not a solved problem.

What is a GM pool?

The market-specific liquidity pool (an index token plus a stablecoin) that backs leveraged trading for that particular market on GMX V2.

Affiliate disclosure

TradeOnDEX may earn a commission if you trade through a link on this page, at no extra cost to you. GMX’s own affiliate/referral terms are still being confirmed for this site, so links here are direct and untracked for now. This article is educational and is not financial advice. See our disclaimer for the full risk warning.