Last price vs. mark price: What every Bybit trader needs to know for TP/SL

Mark price, index price and last traded price are the three pricing mechanisms Bybit uses to calculate margin, trigger liquidation and process take profit and stop loss (TP/SL) orders in derivatives trading. The difference between last traded price and mark price is especially important. It determines if your stop-loss fires before or after your position is liquidated. Bybit's margin calculation model makes understanding this distinction critical. 

Key Takeaways:

• Last traded price determines what price your orders fill at and your realized PnL, while mark price determines when your position gets liquidated and how much margin you’re required to hold.

• Using mark price to trigger your stop-loss order ensures it fires before liquidation, but exposes you to slippage. Meanwhile, using last traded price gives better execution estimates, but risks your stop-loss order failing to trigger before the mark price hits your liquidation level.

• Mark price directly drives real-time margin calculations on Bybit, making it essential for monitoring the gap between your liquidation price and the current mark price. 

What is last traded price (last price)?

Last traded price is the latest price at which a derivatives contract for a specific cryptocurrency has been traded. It reflects the most current market conditions, as well as the most accurate representation of the market value of a cryptocurrency at a given moment in time. The last traded price is updated in real time and is used to determine a trade's realized profit or loss. Essentially, when a trader closes out their position, the profit or loss is the difference between the entry price and the last traded price.