Edit: Just a note, this may not be exactly how the Soul Card and LP system works. This is just based on my experiences, what I've seen, and my own logical assumptions based on that.
Soul Cards are chosen when you are putting the deck/card list together. you will always have the same 5 cards as your soul cards, in the same order (unless you change the card list).
Most* cards have a LP value on them, from 1-3. The LP total of your 5 Soul Cards determines how much life you (the player) have in the battle. If all of your soul cards have 1 LP, then you can take 5 hits before you lose. if the first 3 soul cards have 1 LP, the 4th has 2 LP, and the last has 3 LP, then you have 8 life. Order matters, as explained below.
Let's make an example for the rest of the explanation: your first Soul card has 2 LP, second has 1 LP, third has 3 LP, fourth has 1 LP, fifth has 3 LP. The total is 10, which is how much life you start with. During a battle, you take one hit; you are now at 9 life. Once you take a second hit, your first Soul Card (the one with 2 LP) activates its soul ability (if it has one). You would then be at 8/10 life, with your first soul card gone. One more hit and your Second Soul Card would trigger (again, if it has a Soul Ability).
Generally speaking, the higher the LP of a card, the less beneficial the Soul Ability. Cards with 1 LP tend to have pretty powerful and game-influencing Soul Abilities. Cards with 2 LP have Soul abilities that are still beneficial, but not so much (some cards with 2 LP don't have a Soul ability at all). Cards with 3 LP tend to either have either neutral or even harmful Soul abilities. The strategy comes in striking a balance between the number of hits you can take and what Soul Abilities you want at your disposal.
*: Grimoire cards do not have LP values or Soul Abilities.
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