ByBit: Last Price vs Mark Price differences explained
Updated: Apr 25
"Last Price" is the last price of any trade that takes place at ByBit platform. We count even 1 USD value trade. The important clue is that "Mark Price" (fair price) used on ByBit platform is a price computed as average price from five other spot cryptocurrency exchanges: Kraken, GDAX (Coinbase), BitStamp, Gemini, Bittrex + current funding rates.
On another hand "Index Price" on Bybit is Mark Price without current funding rates, and this is just a base for information cases.
Why do we need to use two (dual price mechanism) or even tree different prices? Explained here:
The reason why we have Last Price and Mark Price at ByBit?
To Avoid price manipulations. Imagine the situation when you are shorting and somebody else clicked with a fat finger to buy 10,000,000 contracts instead of 1,000,000
Lets say just by mistake. What will happen with your deposit?
The average Bitcoin price on the main exchanges is in $50 000 - $50 020 range.
ByBit Mark Price = $50 010
ByBit Last Price = $50 015
You are short and your liquidation price is $50 250. (0.5% to be liquidated)
You are about to close it by clicking Buy Market (to avoid liquidation)
but... some random fat finger trader at ByBit exchange has just brought 10 milions of USDBTC contracts instead of ... 1 milion and it dramatically increased ByBit last price up to $50 354 (just for one or two seconds).
5 seconds later the Last Price is around $50 015 again but... please notice that $50 354 is much higher than your liquidation price and it means your position would get liquidated.
It would but not will only because Mark Price protected your trade in these case.
Generally, Mark Price is in trader's favour.
Overall keep in mind that liquidation on Bybit is exectuted when Mark Price hit (trigger) your liquidation price! The best what we can do to avoid it is to set a smart stop loss before liquidation price with a... Mark Price as a trigger! If you set it via Last Price you can be liquidated before your Stop Loss price would be triggered.
Our 3 advices:
1. Set your take profit orders via limit order and use Last Price as a trigger (you can be lucky and you can close it at better price then Mark Price)
2. Set you stop loss orders via market order using as a trigger Mark Price to avoid painfull liquidation (especially if you use high leverage).
3. Usually in 99% cases advice nr2 works on USDBTC if you set minimum $100-200 differences between your liquidation price and your stop loss. For altcions the differences should be around 0.5%.
The point is that Mark Price on Bybit (and on others exchanges like BitMEX or Phemex) is much more independent and trusted comparing to Last Price.
If there is bigger and longer diffenerce between Last Price and Mark Price during last 8 hours then Bybit applies later on funding rates to try equal these prices as much as possible.
Author: Ministry Of Margin Trading Team