Mark price vs last price vs index price: which one liquidates you?
Perpetual futures show three prices that are easy to mix up. The last price is where the most recent trade happened. The index price is an average of spot prices across several exchanges. The mark price is an exchange's estimate of what the contract is fairly worth, and on the major exchanges it is what decides your unrealised profit and whether you are liquidated. Knowing which price does what explains why a position can be liquidated even though the chart never touched your liquidation level.
Your trades fill at the last traded prices, but liquidation is normally triggered by the mark price. The mark price leans on the index so that one wild trade on one exchange cannot wipe out positions, which means it can differ from the price you see on the chart.
The three prices at a glance
- Last price: the price of the most recent trade on this contract on this exchange. It is what most charts show by default, and it is what your order actually fills against.
- Index price: a weighted average of the underlying asset's spot price across several exchanges. It represents the wider market and not this one contract.
- Mark price: a calculated fair value, built from the index and other inputs, that the exchange uses for risk. It moves more smoothly than the last price.
In a calm market all three sit within a few basis points of each other, and you can ignore the difference. In a violent market they separate, and that is exactly when the difference matters most.
Why exchanges do not liquidate on the last price
A contract's last price can be pushed around. A single large market order in a thin order book can print a trade far from where the asset is really worth. If liquidations triggered on that price, one large order could set off a chain of forced closes, each pushing the price further, and the result would be a cascade that had little to do with the value of the asset.
Using a mark price defends against that. Binance describes its mark price as a way to prevent unnecessary liquidations and discourage manipulation, and says it is less volatile in the short term than the perpetual's own price. On Binance, the inputs include the contract's last price, the best bid and ask series from the order book, the funding rate, and a composite average of spot prices on major exchanges.
How the index price is protected
Because the mark price leans on the index, the index needs protecting as well. Binance's published method is a good illustration of the defences involved. Its USD-margined index draws on a broad list of exchanges, and it applies rules to single sources that go astray. For example, if one exchange's price deviates more than 3% from the median of all sources, Binance caps that source at 1.03 or 0.97 times the median.
That rule is why one exchange showing a sudden wick does not automatically move the index on another. It also explains something traders sometimes find confusing: a spot wick on one exchange may be absent from the mark price elsewhere, and a chart built from one exchange's trades cannot tell you what the index did. When a data source fails or a token has no good direct quote, exchanges also fall back on synthetic prices or other protective mechanisms, and these are documented in their help pages.
Why you can be liquidated when the chart never touched your price
This is the complaint that sends most traders looking for this explanation. Suppose you hold a long with a liquidation price of 60,000. Your chart shows the last price with a low of 60,150. Yet you were liquidated. Usually one of these happened:
- The mark price went lower than the last price. During a fast fall, the index can drop faster than a contract's own trades, or the mark calculation can move ahead of the chart you are viewing.
- The liquidation price moved. It is not fixed. In cross margin, losses on other positions change it, and funding payments slowly reduce your margin. The level you noted an hour ago may have changed.
- Your chart is using the wrong source. Many platforms let you switch the chart between last price and mark price. Look at the mark price chart for the time of the event before drawing a conclusion.
The reverse happens too. A sudden wick on the last price can pass straight through your liquidation level without triggering it, because the mark price did not follow. That protection is the purpose of the design, and it is why a long wick on a chart often does not produce the wave of liquidations you might expect.
Which price is used for what
The exact rules vary between exchanges and contracts, so treat this as a general map and confirm against your exchange's documentation.
- Order fills: always real trades, so the last traded prices and the order book.
- Realised profit and loss: based on your actual fills. Binance states this directly for its USD-margined contracts.
- Unrealised profit and loss: commonly based on the mark price, though some platforms let you display it using last price.
- Liquidation: normally based on the mark price.
- Funding payment: usually position value at the mark price at settlement, multiplied by the rate. So mark price also decides the size of your funding.
- Premium index: compares prices at which an order could be filled against the index, and that premium feeds the funding rate.
Stop orders: choosing a trigger price
Many exchanges let you set a stop order to trigger on either the last price or the mark price. Neither choice is always correct.
- A last-price trigger responds to real trades on this contract. It reacts fast, but a brief wick can fire it, and then you are out of the position at a poor price while the market recovers.
- A mark-price trigger ignores most wicks and is less likely to fire on noise. But in a truly rapid move it can react later, and when it does fire, your order still fills at real traded prices, which may be far away.
Whichever you use, a stop is not a guaranteed price. A stop-market order fills at whatever the book offers, and our guides on order book depth and market order costs explain how far that can be from the trigger.
A worked example of a price gap
Take a long of 0.5 BTC at an entry price of 70,000 with 7,000 USDT of isolated margin. Assume the maintenance margin is small for simplicity. Then the liquidation price is near 56,000, since a 14,000 USDT fall per BTC on 0.5 BTC consumes the 7,000 USDT. Now imagine a crash during which, for one minute, the contract trades 200 points above the index because forced buying from shorts is hitting a thin book. The last price shows 56,150 while the mark price, following the index, reaches 56,000. The chart you are watching never touches your level, yet you are liquidated.
The numbers are illustrative. Real liquidation prices also depend on maintenance margin tiers, fees and your margin mode, and most exchanges display a precise figure on the position screen. Trust that figure over your own quick arithmetic, and remember that it changes.
What to watch in practice
- Keep a buffer from liquidation. The gap between mark and last price is usually small, but it grows at precisely the moments when you are most likely to be close to your level.
- View the mark price chart. Most trading screens offer it as an alternative chart type. Check it after any surprising event.
- Watch the gap as a warning. A wide difference between last and index means the contract has separated from the market. It affects the premium, and the funding rate tends to follow. See our guide to what a funding rate is.
- Read your exchange's page. Definitions and index components change. Binance states that it can update its index references without prior notice.
Common questions about mark price
Why is the mark price different on each exchange?
Each exchange chooses its own index sources, weights and formula, and includes its own contract's prices in the calculation. They normally sit very close to each other because they all track the same asset, but they are not the same number and should not be expected to match exactly.
Can I place an order at the mark price?
No. The mark price is a reference and not a market. You can only trade at prices others are willing to fill at, which means the order book. You may be able to use the mark price as a trigger for a conditional order, but the resulting fill is still at traded prices.
Does the mark price make liquidation fair?
It reduces one specific unfairness, namely being liquidated by a single bad trade. It does not protect you from a real market move. If the wider market falls through your level, you will be liquidated, and high leverage leaves a narrower margin for error whatever price is being used.
Check these on any new contract
- Find which price triggers liquidation on this exchange.
- Open the mark price chart alongside the last price chart.
- Note your liquidation price and how far away it is in percent.
- Choose your stop trigger deliberately and test a small order.
- Read the index components for the exact contract.
Related reading: What a funding rate is · How to estimate slippage from order book depth · What to do when an exchange goes down
Sources
Binance · Mark price and price index · How we measure · About Tickmark
Other guides
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A funding rate is a regular payment between traders holding opposite sides of a perpetual futures contract. It exists because a perpetual contract never expires, so something else has to keep its price close to the underlying asset. When the rate is positive, longs pay shorts; when it is negative, shorts pay longs. The exchange sets the formula but, on the major exchanges, the money moves between traders.
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