The last price and position risk are not just one number
The last price shows where the most recent trade took place. But for controlling a futures position, that’s not enough.
For perpetual contracts, it’s important to look separately at the mark price, liquidation price, funding, and margin buffer. The last trade may be a brief market move, while the mark price is used for a more stable valuation of the contract and the liquidation risk.
For TradFi Perps, this methodology is especially important when the underlying market is closed and the contract continues trading.
My minimum pre-entry verification screen:
• Last price — where the trade went through;
• Mark price — how the system values the contract;
• Liquidation price — where the buffer ends;
• Funding — how costly time can be.
A chart may look calm, but a position with a small margin buffer will still remain fragile.
#TradFi
The last price shows where the most recent trade took place. But for controlling a futures position, that’s not enough.
For perpetual contracts, it’s important to look separately at the mark price, liquidation price, funding, and margin buffer. The last trade may be a brief market move, while the mark price is used for a more stable valuation of the contract and the liquidation risk.
For TradFi Perps, this methodology is especially important when the underlying market is closed and the contract continues trading.
My minimum pre-entry verification screen:
• Last price — where the trade went through;
• Mark price — how the system values the contract;
• Liquidation price — where the buffer ends;
• Funding — how costly time can be.
A chart may look calm, but a position with a small margin buffer will still remain fragile.
#TradFi