The details in futures trading that are easy to overlook


I only understood this later myself 🥲🥲

1⃣ Mark Price (MARK PRICE)

This is designed to prevent market anomalies and manipulation. Simply put, it takes the average market price to serve as the basis for liquidation and the calculation of floating profit and loss.

Imagine you're trading on a platform, and suddenly someone places a large order that causes the chart to spike. Based on the spot price, you should have been liquidated already. But because of the mark price mechanism, the system doesn't blindly liquidate you at the last traded price. It references the overall market average level to protect you from extreme fluctuations on a single exchange.

That's why sometimes you see candlestick charts filled with green, but your account hasn't been liquidated — the mark price and the current price have diverged, and the system uses the mark price to make its judgment.
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