# How is the v3 close price formula derived?

**URL:** <https://dydx.forum/t/how-is-the-v3-close-price-formula-derived/1212>\
**Category:** Other\
**Created:** [September 26, 2023, 3:45pm UTC](https://dydx.forum/t/how-is-the-v3-close-price-formula-derived/1212 "2023-09-26T15:45:29Z")\
**Posts on this page:** 3\
**Page:** 1

<div class="post-metadata">

**Author:** ![alexcj96](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@alexcj96](https://dydx.forum/u/alexcj96)\
**Post date:** [September 26, 2023, 3:45pm UTC](https://dydx.forum/t/how-is-the-v3-close-price-formula-derived/1212/1 "2023-09-26T15:45:29Z")

</div>

[https://dydxprotocol.github.io/v3-teacher/#liquidations](https://dydxprotocol.github.io/v3-teacher/#liquidations)

 ![image](https://europe1.discourse-cdn.com/flex013/uploads/dydx/original/1X/915fbb62bd8ffea8b9304f24a49c9c104994ecc1.png)

---

<div class="post-metadata">

**Author:** ![alexcj96](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@alexcj96](https://dydx.forum/u/alexcj96)\
**Post date:** [September 26, 2023, 3:46pm UTC](https://dydx.forum/t/how-is-the-v3-close-price-formula-derived/1212/2 "2023-09-26T15:46:18Z")

</div>

Anyone has an idea on why it looks like this? How to understand this formula?

I’m able to understand [this example](https://help.dydx.exchange/en/articles/4797401-perpetual-contract-liquidations) but not the formula itself

---

<div class="post-metadata">

**Author:** ![alexcj96](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@alexcj96](https://dydx.forum/u/alexcj96)\
**Post date:** [September 29, 2023, 2:12pm UTC](https://dydx.forum/t/how-is-the-v3-close-price-formula-derived/1212/3 "2023-09-29T14:12:44Z")

</div>

Feel it should be:

```auto
Close Price (Short) = P × (1 + (M × V * (1 - M) / W))
Close Price (Long) = P × (1 − (M × V * (1 - M) / W))

```

instead, anyone has an idea?