CoinEx contract calculation formula

CoinEx's user-centric contract trading system relies on sophisticated calculation formulas for accurate contract valuation, precise order execution, and risk management.

Nov 24, 2024 at 05:32 am

CoinEx Contract Calculation Formula

CoinEx, a renowned cryptocurrency exchange, has established itself as a leading platform for contract trading. Its user-friendly interface, robust security measures, and diverse selection of crypto contracts have attracted a vast number of traders worldwide.

At the core of CoinEx's contract trading system lies a sophisticated set of calculation formulas that govern the valuation and execution of contract orders. Understanding these formulas is crucial for traders to make informed decisions and maximize their trading strategies.

Contract Valuation

1. Contract Price:

• The contract price is the current market price of the underlying asset (e.g., BTC, ETH).
• It is derived from a weighted average of prices across multiple exchanges and liquidity providers.
• The contract price fluctuates in real-time based on market demand and supply.

2. Index Price:

• The index price is a benchmark price that represents the average price of the underlying asset across a wider range of exchanges and trading platforms.
• It is used as a reference point to calculate fair value and prevent price manipulation.
• The index price is typically computed as a moving average of recent prices or a VWAP (volume-weighted average price).

3. Funding Rate:

• The funding rate is a periodic payment made between long and short positions.
• It is designed to maintain the contract price in line with the index price.
• A positive funding rate indicates that longs are paying shorts, while a negative rate indicates the opposite.

Contract Execution

1. Order Type:

• CoinEx supports various order types, including limit orders, market orders, and stop orders.
• Limit orders allow traders to specify the price at which they want to buy or sell a contract.
• Market orders execute immediately at the best available price in the market.

2. Order Size:

• The order size refers to the number of contracts that a trader wishes to buy or sell.
• It is measured in units known as lots, where each lot represents a fixed amount of the underlying asset (e.g., 1 ETH for BTC contracts).

3. Leverage:

• Leverage amplifies the potential gains and losses of a trade by borrowing funds from the exchange.
• CoinEx offers variable leverage options, allowing traders to adjust the amount of leverage applied to their positions.
• Higher leverage increases potential profits but also amplifies risks.

4. Margin:

• Margin is a collateral that traders must maintain in their accounts to cover potential losses on leveraged positions.
• The required margin is calculated as a percentage of the contract value and varies depending on the leverage used.
• If a position's margin falls below a certain level, the exchange will trigger a margin call, requiring the trader to increase their margin or liquidate the position.

5. Liquidation Price:

• The liquidation price is the price at which a leveraged position is automatically closed to prevent the trader from incurring significant losses.
• It is calculated by factoring in the entry price, leverage, and margin.
• If the contract price moves against the trader's position and reaches the liquidation price, the exchange will force the position to close, resulting in a realization of losses.