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Index Price, Fair Price and Last Price

2023.05.24 MEXC
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On the Futures Trading interface, MEXCers will encounter three prices: Index Price, Fair Price and Last Price. But what do these prices mean and how are they different?

Page Introduction

MEXCers can view these three prices on the trading page. Usually, these prices will be fairly close in value.

From MEXC App

From MEXC


Index Price

MEXC takes spot prices of the selected currency from three or more exchanges and calculates a weighted average to derive the index price.

Last Price

The Last Price is the real-time trading price of the selected currency on MEXC Futures Trading.

Fair Price

  • MEXC uses a uniquely designed fair price marking system. This ensures the marked price does not deviate too far from the Index Price as a result of market manipulation or illiquidity. This helps prevent the unnecessary forced liquidation of highly leveraged products.

  • This system sets the mark price to the fair price instead of the last traded price, thus avoiding unnecessary forced liquidation.

Why Use Fair Price to Calculate PNL and Liquidation?

  • In order to improve the stability of Futures Trading and reduce unnecessary forced liquidation when the futures market fluctuates abnormally, MEXC Perpetual Futures utilizes a uniquely designed Fair Price marking system.

  • Without this system, there may be unnecessary deviations between the intraday price and the index price due to market manipulation or lack of liquidity, resulting in unnecessary forced liquidation.

Calculation of Fair Price

  • Fair price = Spot index price + Cost Basis Moving Average

  • Cost Basis Moving Average = Moving average (Average of best ask price and best bid price - Spot index price) = Moving average ((Best ask price - Best bid price) / 2 - Spot index price)

Please Note

  • This price only affects the liquidation price and the unrealized profit and loss, it does not affect the realized profit and loss.

  • This means that when MEXCers' orders are executed, they may see positive or negative unrealized profit and loss immediately.

  • This happens due to a slight deviation between the Fair Price and the Last Price.

  • This is a normal phenomenon and does not mean that MEXCers have lost funds, but MEXCers must pay attention to the forced liquidation price to avoid being forced to liquidate prematurely.

Conclusion

  • These three prices all provide MEXCers with valuable trading information.

  • When MEXCers set take profit and stop loss, they can also place orders based on these three different benchmark prices to obtain their desired result.



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