Latest Price and Mark Price Explanation:
Last updated
Last updated
Latest Price
The latest price refers to the most recent transaction price of a contract, i.e., the price determined by the last executed trade. In the case of SAFEX perpetual contracts, the latest price is influenced by the underlying asset and may deviate from the spot price of the asset due to ongoing buying and selling activities. Therefore, the latest price can reflect a unique market price formed by independent supply and demand dynamics.
Mark Price
The mark price is the estimated fair value of the contract, commonly used to manage risk and prevent unnecessary forced liquidations during market fluctuations. SAFEX’s mark price aggregates price information from multiple sources to form a more stable and reliable price indicator, preventing price manipulation and abnormal volatility.
Viewing Mark Price Historical Data
Users can view the historical mark price data on both the SAFEX web and app platforms.
Web Platform: Click on the contract data section on the web platform to navigate to the mark price page.
App Platform: On the contract trading page, click the three small dots in the top-right corner and select “Historical Mark Price” to view relevant data.
Forced Liquidation and Unrealized Profit/Loss
Forced Liquidation
Forced liquidation uses the mark price, not the latest price. When the mark price reaches the liquidation price of a position, forced liquidation may occur. This mechanism ensures that traders are protected by using the mark price for liquidation, preventing unfair forced liquidation due to short-term fluctuations in the latest price before the spot price reaches the liquidation level.
Stop-Loss Settings Considerations
Users often wonder why a stop-loss does not prevent liquidation. This situation is usually because the stop-loss price is set too close to the liquidation price and the stop-loss is set based on the latest price rather than the mark price. The mark price may reach the liquidation level faster than the latest price. Therefore, it is recommended that users set stop-loss orders near the liquidation price using the mark price.
Unrealized Profit/Loss Calculation
The mark price is used to calculate the unrealized profit/loss of an open position, ensuring that profit and loss calculations before liquidation are based on a fair and stable price benchmark.
In short, the latest price refers to the specific transaction price completed at a given time, while the mark price is the smoothed average price used to mitigate the risks of extreme market fluctuations. The mark price is always used as the liquidation price for contracts, providing a more stable and reliable value assessment standard. Although the mark price reflects an average value, it is not the actual market transaction price. Instead, it acts as a risk management tool to help avoid unnecessary forced liquidations.
Enjoy trading on SAFEX.
