What is the difference between Mark and Index price?
Mark Price: the price at which the perpetual contract will be valued during trading hours.
The price on the label of an article/product is called the marked price (mp) or list price. This is the price at which a product is intended to be sold. However, there can be some discount given on this price and the actual selling price of the product may be less than the marked price. It is generally denoted by MP.
Index Price + 15-second EMA (Fair Price - Index Price)
Liquid uses Mark Price as a trigger for liquidation and to measure unrealized profit and loss, but this does not affect traders’ actual profit & loss. Only when the Mark price does reach the traders’ liquidation price is the traders’ position then liquidated.
equals to Mark Price, as positions are settled at Mark Price
Index Price: price of the underlying instrument
Average of mid prices listed below, after removing lowest and highest value:
- mid price (ie (best bid + best ask) / 2) of BTC/USD from Bitstamp, Coinbase, Gemini and Kraken, and converted to BTC/JPY using the current USDJPY rate
- mid price of BTC/JPY market from Liquid
Last Price and Mark Price at Liquid are used together to try and prevent price manipulation.
Imagine a situation: You enter a short, but then another trader made an error aka a 'fat finger' to buy 1,000,000 contracts instead of 100,000.
You are on a short position and your liquidation price is $9030. When you are about to close this position, a fat finger at another exchange has just bought a $1,000,000 contract, thus a sudden increases the last price on that exchanges up to $9335.
Since $9335 is higher than the liquidation price of your short position, and therefore would mean your short position is forced liquidated.
BUT, because you used Liquid Perpetuals, where Mark Price is used, then your trade price is protected from liquidation . Generally, Mark Price is always in the trader's favor and is there to protect our traders.
Have questions about Perpetual Contracts and trading? Contact our Customer Support team now.