How is the mark price of CoinEx contract calculated?

Understanding the Mark Price in CoinEx Futures Trading

The mark price is a crucial component of futures trading on platforms like CoinEx, especially when managing open positions, liquidations, and unrealized profits or losses. Unlike spot markets, where prices are straightforwardly determined by order books, futures contracts rely on mark price to reflect fair value and prevent manipulation.

In CoinEx futures trading, the mark price plays a vital role in determining the current valuation of a trader's position.

Components Used in Calculating Mark Price

CoinEx utilizes a combination of data sources and algorithms to derive an accurate and reliable mark price for each contract. The primary components include:

• Spot price from major exchanges
• Funding rate adjustments
• Time-weighted average price (TWAP) over specific intervals

Each of these factors contributes to forming a stable and realistic representation of the asset’s current market value without being influenced by short-term volatility or manipulative trading behaviors.

The goal is to ensure that the mark price closely reflects the true market value of the underlying asset.

Role of Funding Rates in Mark Price Calculation

Funding rates are periodic payments exchanged between long and short traders to keep the futures price aligned with the spot price. These rates are applied every 8 hours and influence how the mark price adjusts relative to the index price.

• Positive funding rate: Longs pay shorts; mark price may trend higher
• Negative funding rate: Shorts pay longs; mark price may trend lower

This mechanism helps maintain equilibrium between perpetual contracts and the actual spot market.

Funding rates directly affect the mark price, making it essential for traders to monitor them regularly.

How Index Price Influences Mark Price

The index price is derived from the average spot prices across multiple reputable exchanges. CoinEx selects several top-tier exchanges and calculates a weighted average to form the index price.

Steps involved in this process:

• Collecting real-time spot prices from selected exchanges
• Removing outliers to avoid distortions
• Applying weights based on exchange liquidity and volume
• Computing a final index price

This index price serves as the foundation upon which the mark price is built, ensuring robustness and reliability.

A well-calculated index price ensures the mark price remains resistant to manipulation and volatility spikes.

Differences Between Mark Price and Last Traded Price

Many new traders confuse the mark price with the last traded price, but they serve different functions:

• Mark price: Used for calculating unrealized PnL and triggering liquidations
• Last traded price: Reflects the most recent transaction on the platform

During periods of high volatility, the last traded price can deviate significantly from the mark price, leading to discrepancies in perceived portfolio value.

Understanding the difference between mark price and last traded price is key to avoiding unexpected liquidations.

Practical Implications for Traders

Traders should be aware of how mark price affects their positions, particularly regarding:

• Liquidation risks: High leverage combined with adverse price movements can lead to early liquidation if the mark price breaches stop-loss levels
• Unrealized PnL: This is calculated using the mark price, not the last traded price
• Position management: Monitoring mark price trends helps in better decision-making

Failure to account for mark price behavior can result in unnecessary losses or premature exits from profitable trades.

Smart traders use the mark price as a reference point for risk assessment and trade planning.

Frequently Asked Questions

Q: Where can I view the mark price on CoinEx?You can find the mark price displayed alongside your open positions on the futures trading interface. It updates in real time based on the latest market conditions.

Q: Does mark price affect realized profit and loss?No, realized PnL is calculated using entry and exit prices, while unrealized PnL is based on the mark price.

Q: Can mark price be manipulated?CoinEx employs safeguards such as TWAP and index price averaging to reduce the risk of manipulation, making the mark price highly resistant to artificial influences.

Q: Why does the mark price differ from the order book price?Because the mark price is derived from external spot prices and adjusted for funding, it may temporarily diverge from the internal order book price during volatile conditions.