Trading term

What is Mark price?

The mark price is the reference price an exchange uses to value open derivative positions — calculating unrealised profit and loss and deciding when to liquidate. It is derived from the spot index rather than the contract's own last trade, so a single venue's order book can't decide who gets closed out.

A perpetual or futures contract quotes more than one number at once. The LAST price is simply what the contract most recently traded at on that venue. The mark price is a calmer figure built from the underlying spot index plus a smoothed basis, and it is the one the exchange actually uses: your unrealised P&L is marked against it, and your liquidation is triggered by it.

The separation exists to stop a specific attack. If liquidations were checked against the last traded price, anyone with enough size could shove one thin order book through a cluster of liquidation levels, collect the forced sales, and let price snap back. Anchoring to a multi-exchange index makes that manoeuvre cost the price of moving the entire spot market, which is a far larger bill.

The practical consequence for a trader is that a violent wick on the chart does not necessarily liquidate you, and a calm-looking chart on your venue does not necessarily protect you. What matters is where the mark price went, not where the candle did.

For example

A Bitcoin perpetual last traded at $100,420 on one exchange while the spot index sits at $100,000. The mark price might be $100,050 — index plus a smoothed basis. A long's liquidation is checked against that $100,050, not the $100,420 on the ticker.

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Why it matters to you

Mark price is the number that decides whether your position survives, so reading your liquidation distance off the last traded price is measuring against the wrong ruler. It also explains an experience that confuses new derivatives traders: seeing a wick pierce their stated liquidation level on the chart and finding the position still open.

⚠ The candle on your screen isn't the trigger

Charts usually plot the last traded price, but liquidation runs off the mark price. The two diverge exactly when it matters most — during a fast move on one venue. Judging how close you are to being closed out from the candles alone can be wrong in either direction.

Frequently asked questions

What is the mark price?

The mark price is the reference price an exchange uses to value open positions — for unrealised profit and loss and for liquidation. It is calculated from the underlying spot index plus a smoothed basis, rather than taken from the derivative's own last trade.

What's the difference between mark price and last price?

Last price is what the contract most recently traded at on that one venue and can be moved by a single large order. Mark price is derived from spot prices across several exchanges, so it is much harder to push. Liquidations use the mark price.

Why is my liquidation based on the mark price?

To stop liquidation hunting. If a thin order book could set liquidation levels, a large trader could push price through a cluster of them, take the forced sales, and let price recover. Anchoring to a multi-exchange index makes that far too expensive to be worth attempting.

Read the full guide

DerivativesWhat Is a Perpetual Future? The Contract That Never ExpiresA perpetual future is a futures contract with the expiry date deleted. Something has to do the job that expiry did, and that something is the funding rate — a payment you make every eight hours, forever. Here's how perps work, what funding really costs, and why liquidation arrives sooner than the maths suggests.11 min read

Related terms

BackwardationBackwardation is when futures prices are lower for later delivery dates — the futures curve slopes downward. It often signals tight near-term supply or strong demand for immediate delivery. For futures holders it creates a positive 'roll yield,' as they sell pricier near-term contracts and buy cheaper later ones.BasisBasis is the difference between an asset's futures price and its current spot (cash) price. It reflects carrying costs, supply and demand, and time to expiry — and it converges to zero as the contract nears expiration, since a future about to settle must match the spot price. Traders watch basis to gauge conditions and to hedge.Borrow feeThe borrow fee is what a short seller pays to rent the shares they've borrowed, quoted as an annual rate on the value of the position and charged for every day the short is held. An easy-to-borrow stock might cost a fraction of a percent a year; a hard-to-borrow one can cost many times that.CFD (contract for difference)A CFD (contract for difference) is a derivative where you and a broker agree to exchange the difference in an asset's price between opening and closing the trade. You never own the underlying — you simply profit or lose on the price move, with leverage. CFDs cover stocks, indexes, commodities and crypto, and are popular outside the US, where they're banned.
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