3EX Deciphers the Connection and Distinction Between Last Traded Price, Index Price, and Mark Price
In the realm of cryptocurrency asset trading, the last traded price, index price, and mark price are three crucial concepts, each serving distinct roles in the trading process. Understanding their relationships and differences holds paramount importance for investors.
Last Traded Price
The last traded price is a relatively straightforward concept, denoting the actual price at which the most recent trade occurred. This is the price you see on the exchange and is the most intuitive market price. The last traded price is momentary and fluctuates with changes in market supply and demand.
Index Price
Index price is a broader concept, calculated as an average price derived from price data across multiple exchanges. These exchanges are typically major platforms with high trading volumes. The purpose of the index price is to provide a more comprehensive and equitable market price. It relies on data from several markets, making it more reliable and less susceptible to abnormal price fluctuations on a single exchange.
Mark Price
Mark price is a price calculated based on the index price and various risk control mechanisms. It plays a crucial role in contract trading and risk management. Mark price’s stability and predictability make it a key reference point for trading strategies. It is generally the index price with an adjustment factor, tailored to the requirements of risk control.
3EX’s mark price adopts a comprehensive approach, combining index prices from multiple exchanges and short-term trends. Index prices are determined through a weighted average of various exchanges, such as Binance, OKEx, MEXC, Coinbase, Bitget, Gate.io, and Huobi. Short-term price trends are calculated by measuring the price fluctuations within a 30-minute period, which are then integrated with the index price to derive the mark price.
Connection and Distinction
While there are some connections among the last traded price, index price, and mark price, there are also significant distinctions. The last traded price reflects the actual market price of recent trades, whereas the index price is an average price from multiple exchanges, and the mark price is a calculated price based on the index price with adjustments.
In practical trading, the last traded price is used for executing market orders, while the index price is employed in calculating the mark price. The stability of the mark price makes it particularly vital in contract trading, as it is less susceptible to sudden market fluctuations.
3EX is committed to providing a stable and reliable mark price, facilitating traders in managing and executing cryptocurrency asset trades effectively.
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