There’s a question I often get asked in trading groups: Why does the same contract show two different prices on the futures platform? Today, let’s talk about this often-overlooked but very important aspect.

When you trade futures, you’ll encounter two price concepts. One is the price you see when trading—that is, the most recent transaction price, which we call the trading price. The other is a fairer valuation calculated by the platform to protect traders, called the mark price. Many people get confused about these, but understanding the difference between them is very helpful for risk management.

Let’s start with the trading price. As the name suggests, it’s the last executed transaction price. For example, in perpetual contracts like BTCUSDT, the value comes from the underlying asset—Bitcoin. But this contract also has its own order book. The larger the trading volume, the more the trading price can deviate from the spot market Bitcoin price. Sometimes, when the futures market is very active, this deviation becomes more noticeable. So you might see the trading price fluctuate sharply in the short term, even diverging significantly from the spot price.

This is why exchanges introduce the concept of the mark price. The mark price isn’t used for actual transactions but serves as a risk monitoring indicator. It considers the trading price, the bid-ask spread in the order book, funding rates, and the average of spot prices across multiple major exchanges. What’s the benefit of this? It helps prevent abnormal price impacts caused by a single order book or a large trade. Especially during volatile market conditions, the mark price can effectively smooth out these abnormal spikes.

The mark price is mainly used in two situations. First, for liquidation decisions. When the mark price hits your liquidation level, the system executes the liquidation, not the trading price. This design protects you from unfair liquidations caused by short-term price swings—that is, even if the trading price fluctuates due to market sentiment, as long as the mark price hasn’t reached the liquidation threshold, your position remains safe. Second, it’s used to calculate unrealized profit and loss. Before you close your position, the system uses the mark price to determine your unrealized gains or losses, which is more stable and fair than using the trading price.

To put it in a simple analogy: the trading price is like the gas price at your local station—it can fluctuate due to supply or other factors; the mark price is like the national average gas price, which more accurately reflects the true market level. The trading price is more susceptible to emotions and short-term trading behaviors, while the mark price is designed to be more stable and resistant to manipulation.

If you’re trading on a futures platform and want to switch between these two prices on the chart, it’s very easy. Whether on mobile or web, you can switch in the price options. Understanding the difference between these two prices will help you manage risk better and avoid being caught off guard by short-term volatility. Especially in highly volatile markets, this knowledge can help you trade more confidently.