Mark Price(Mark Price) Beginner's Guide
Mark Price is a reference for the fair value of a contract calculated by the exchange. It is used to measure unrealized profit and loss, check margin, and trigger liquidation; understanding how it differs from the last price helps assess the risks of leveraged positions.
Mark Price What is
Mark Price is a fair value price calculated by the exchange based on broader market data. It typically references a spot price index from multiple trading venues and may include funding rate or basis adjustments. The exchange uses it to calculate unrealized profit and loss on positions, check margin status, and determine whether to trigger liquidation.
Difference between it and last price
last price is simply the price of the most recent trade in the order book, and may move rapidly when liquidity is low or the market suddenly becomes volatile.Mark Price is generally smoother and less susceptible to short-term anomalies at a single trading venue, making it more suitable as a reference for the fair value of a contract and risk calculations.
Why is it used for liquidation decisions
Most major platforms use Mark Price rather than last price to trigger liquidation, with the aim of preventing brief wicks or abnormal price movements on a single platform from unfairly closing positions. Using broader market data cannot eliminate risk, but it can reduce the impact of short-term price distortions on liquidation decisions.
How beginners can view it
When observing charts and trade results,last price reflects trades that have just occurred; when assessing how far a leveraged position is from liquidation, you should focus on Mark Price. The two may differ, so monitoring both is necessary to account for current trading activity and the risk reference price used by the platform.
Original Tutorial
https://www.binance.com/en/academy/glossary/mark-price
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