Understanding Mark Price & Its Impact on Trades.
Understanding Mark Price & Its Impact on Trades
As a crypto futures trader, understanding the nuances of pricing mechanisms is paramount to consistent profitability. While the “Last Price” might seem like the obvious benchmark, a far more crucial metric dictates how your positions are managed, especially regarding liquidation: the Mark Price. This article will delve into the intricacies of the Mark Price, its calculation, and how it directly impacts your trades, particularly in the context of risk management. We will explore why it differs from the Last Price, how exchanges utilize it, and how you can leverage this knowledge to improve your trading strategy.
What is the Mark Price?
The Mark Price, also known as the Funding Rate Reset Price, is an estimated fair price for a futures
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