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What Is the Danger of Using the ‘Last Traded Price’ for Liquidation?

LTP is easily manipulated and volatile; using it could trigger unfair liquidations based on temporary price swings.
Greeks.Live22.11.25

What Is the Danger of Using the ‘Last Traded Price’ for Liquidation?

The Last Traded Price (LTP) is highly susceptible to short-term market volatility, low liquidity, and malicious price manipulation, such as 'wicks' or 'spoofing'. If the LTP were used for liquidation, a large, single trade could temporarily move the price, triggering a wave of unfair liquidations.

The Mark Price, being an average, is used instead to provide a more stable and reliable liquidation trigger, protecting traders.

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