What is Mark Price?
Mark price is a reference price used by exchanges to calculate the value of positions and determine liquidations in derivatives trading. It's designed to be manipulation-resistant and typically combines spot price, contract price, and funding rate to create a fair value estimate.
Components
Calculation Factors
- Index price
- Contract price
- Funding rate
- Time decay
- Market volatility
Protection Mechanisms
- Manipulation resistance
- Price impact mitigation
- Liquidation fairness
- Market stability
Applications
Position Management
- PnL calculations
- Margin requirements
- Liquidation levels
- Risk assessment
Trading Impact
- Order execution
- Position monitoring
- Risk management
- Strategy planning
Related Terms
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