Mark price vs last price vs index price, explained

A perpetual futures screen shows three prices that are easy to confuse. Last price is the most recent trade on that venue. Index price is an average of spot prices from several sources. Mark price is derived from the index, and most venues use it to calculate unrealised profit and loss and to decide liquidation.

Examples use illustrative prices and a simplified model. Exact methods vary by venue.

Last price

Last price is the price of the most recent trade in that contract’s order book.

It is the number most charts show. It reflects real trades, but only on one venue. A single large market order in a thin book can move it sharply for a few seconds. The order book guide shows why depth matters here.

Index price

Index price is an average of the underlying asset’s spot price across several sources.

A typical index takes spot prices from a set of venues and weights them. Many indexes also discard a source that strays too far from the others. The result is harder for one venue’s trading to move.

The index is a reference. No one trades at the index price directly.

Mark price

Mark price is the venue’s estimate of a contract’s fair value, built from the index.

Methods differ, but most start with the index price. They then add a smoothed measure of the gap between the perp and the index, called the basis or premium. Some venues take a median of several inputs. The goal is a price that tracks the market but resists brief spikes.

Mark price is usually used for:

• Unrealised profit and loss on open positions.
• Liquidation, when mark price reaches the liquidation level.
• Margin checks, such as how much margin is free.

Funding uses related inputs. Many funding formulas compare the perp’s price with the index; see funding rates explained.

The three side by side

	Last price	Index price	Mark price
What it is	Most recent trade on this venue	Average of spot prices across sources	Fair-value estimate built from the index
Moved by one large order?	Yes, briefly	Rarely	Much less than last price
Can you trade at it?	It was a real trade	No	No
Typical use	Charts, fills, some stop triggers	Reference for mark price and funding	Unrealised P&L, liquidation, margin

Why venues use mark price for liquidation

Liquidation closes a position by force. If it ran on last price, one aggressive order in a thin book could push the last price through many liquidation levels at once. Those forced closes could then push the price further.

Mark price reduces that risk. Because it follows a multi-source index, a brief move on one venue does not by itself reach liquidation levels. A real, sustained move in the wider market still does. For how forced closes can chain together, see liquidation cascades explained.

Worked example: last price spikes, mark price does not

The position

• Long 0.1 BTC perp at $60,000.00, isolated margin
• Notional value: 0.1 × $60,000.00 = $6,000.00
• Leverage 10x → initial margin $600.00
• Maintenance margin rate 0.5% → maintenance margin $30.00
• Loss the position can absorb: $600.00 − $30.00 = $570.00
• Estimated liquidation price: $60,000.00 − ($570.00 ÷ 0.1) = $54,300.00

This matches the simplified model in leverage, margin and liquidation explained.

The spike

A large market sell hits a thin order book. For a few seconds the prices read:

• Last price: $54,000.00
• Index price: $59,950.00
• Mark price: $59,940.00

Unrealised P&L on each price

• On mark price: 0.1 × ($59,940.00 − $60,000.00) = −$6.00
• On last price: 0.1 × ($54,000.00 − $60,000.00) = −$600.00

What happens to the position

The last price of $54,000.00 sits below the estimated liquidation price of $54,300.00. If liquidation used last price, this position would be closed.

The mark price of $59,940.00 is $5,640.00 above the liquidation price. So, on a venue that liquidates on mark price, the position stays open. The screen shows an unrealised loss of $6.00, not $600.00.

If the spot market itself fell, the index and mark price would follow. A sustained mark price at or below $54,300.00 would still trigger liquidation.

When last price still matters

Mark price governs liquidation, but last price still affects a position:

• Fills. A market order fills against the book at real prices, not at the mark price. Selling into the spike above would fill near $54,000.00.
• Realised P&L. Once a position is closed, profit or loss uses actual fill prices.
• Stop triggers. Many venues let stops and take-profits trigger on last price or mark price. A last-price stop could fire during the spike above. A mark-price stop would not. See take-profit and stop-loss on perpetuals.

Reading the gap between them

The gaps between the three prices carry information:

• Last price far from mark price suggests a short-lived move or a thin book on that venue.
• Mark price above the index reflects a positive premium. Funding on many venues tends to be positive then.
• Mark price below the index reflects a discount, often with negative funding.

None of these gaps says where price goes next. They describe the market at that moment.

Common mistakes

• Watching only the chart. Charts usually plot last price. The liquidation check usually uses mark price.
• Assuming a stop uses mark price. Check the trigger setting on each order.
• Treating mark price as a fill price. Orders fill at book prices.
• Expecting one formula everywhere. Index sources and mark methods vary by venue. Check your venue’s contract specification.

Related

For the contract these prices belong to, start with what are perpetual futures. For how margin modes change which balance is at risk, see isolated vs cross margin.