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Dual Price Model

7 months ago

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Welcome to MCS, the world-class derivatives trading platform where traders ALWAYS come first.

   

The topic of this post is the "dual price model" in MCS.

 

Since they are the trading places of valued assets, all exchanges are overwhelmed by numbers. MCS, a cryptocurrency derivative exchange created by financial experts, is no exception.

   

Today, of all the numbers in the exchange, I would like to talk about two prices that are considered to be the most important.

   

 

Dual Price Model essential for Trader's Protection and Optimal Trading

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When you look at the Order Book in the MCS trading page, you can see that there are three prices and a percentage between the long and short positions.

1️⃣ is the last traded price
2️⃣ prices in the middle are the mark price and the index price, respectively.
3️⃣ percentage represents the rate of change from the previous day.

The dual price model consists of the last traded price and the mark price. This protects traders from undue damage caused by market manipulation, lack of liquidity or deviations from spot and futures prices.

 

MCS, MyCoinStory, 마이코인스토리, 무기한계약, derivatives trading, 이중가격모델, dual price, BTC, USDT, BTCUSDT, Bitcoin, orderbook, 오더북,

 

What is the Last Traded Price?

The last traded price is the current market price in MCS. Unfortunately, in a volatile market, the last traded price may temporarily deviate from the mark price. Traders should pay attention to the gap between the liquidation price and the mark price to avoid unnecessary liquidation.

     

What is the Mark Price?

The mark price is composed of the global spot index price, which represents the average price of the spot USDT prices derived from the pool of 7 global spot exchanges ruling out the largest and smallest prices, and the funding basis. This mark price is applied to ensure that futures prices are in line with spot prices and provide a fair trading environment for all traders at MCS.

Compared to the prices of perpetual contracts in the market where short-term market volatility can be high, the mark price represents the contract price that is more accurate and reasonable at that point. Therefore, the liquidation occurs when the mark price meets the liquidation price. This price helps MCS traders to minimize unnecessary liquidation and minimizes the possibility of manipulation by market disturbers.

   

$$ \textsf{Mark Price [MP]} = {\textsf{Index Price}\times \textsf{1 + *Funding Basis}} $$

$$ \textsf{Funding Basis} = {\textsf{Current Funding Rate}} \times {\textsf{Time until Funding} \over \textsf{Funding Interval}} $$

     

   

Let us look at an example and understand why this dual price model is so important.

<Example>

The mark price and the last traded price are currently set at similar values of 10,000 USDT and 10,001 USDT, respectively.

David, a Bitcoin whale, wants to enter a short position with 100x leverage using his entire Bitcoin in MCS. In doing so, the last traded price plunges to 5,000 USDT, while the mark price still remains at 10,000 USDT.

If only a single price was used, or if the last traded price was used as a measure of liquidation, most long-position leveraged traders would have been liquidated for an undue reason.

MCS uses the dual price model to prevent such unfair happening.

   

 

In this post, we looked at the mark price and the last traded price of the dual price model. We hope you to realize an even higher profit by understanding the system of MCS!

   

Again, traders always come first in MCS.

 

Thank you.

   

START TRADING

   

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Published 7 months ago