GlossaryAdvanced
Mark Price
A smoothed reference price, distinct from the last traded price, that exchanges use to calculate unrealized profit and trigger liquidations.
Mark price is a smoothed reference price — typically derived from a broader index of spot prices rather than a single exchange's own last traded price — that derivatives exchanges use to calculate a position's unrealized profit or loss and to determine when a position should be liquidated.
Using mark price instead of the last traded price is intended to make liquidations more resistant to brief, isolated price spikes or thin-liquidity manipulation on a single exchange, which could otherwise trigger an unnecessary liquidation based on a temporarily distorted price.
Examples
- A position's liquidation price is generally calculated against the mark price, not the exchange's own last traded price.
- A brief, thinly-traded price spike on one exchange is less likely to trigger a liquidation when mark price (derived from a broader index) is used instead of that exchange's own last price.