Methods for Calculating the Average Entry Price: A Complete Guide

If you trade on the Gate.io platform, you know how important it is to understand how to find the average price of your positions. The entry average price is a key indicator that helps traders track the actual cost of their portfolio and make informed decisions about closing or increasing a position. In this guide, we’ll explain how the average price is calculated for different types of derivative products on the platform.

Inverse Contracts: Basic Approach to Calculating the Average Price

Inverse contracts (both perpetual and futures) have a special feature—they are quoted in USD but calculated in the cryptocurrency itself (for example, in BTC). This means that the formula for determining the entry average price differs from other products.

The principle of calculating the average price here is based on accumulating your position multiple times at different prices. To find the real cost of your entry, you need to sum all the contract costs in the cryptocurrency, then divide the total number of contracts by this sum.

Calculation formula:

Entry average price = Total number of contracts / Total contract value

Where: Total contract value = (Quantity1 / Price1) + (Quantity2 / Price2) + (Quantity3 / Price3)…

Practical example:

Suppose you opened a position in BTCUSD. First, you bought 50 contracts at $10,000 per contract. Then, when the price increased slightly, you decided to add another 50 contracts at $15,000.

Calculation:

• Total contract value in BTC = (50 / 10,000) + (50 / 15,000) = 0.00833333 BTC
• Entry average price = 100 contracts / 0.00833333 = $12,000

Thus, your actual entry average price is $12,000, which lies between $10,000 and $15,000.

USDT Perpetual Contracts: How to Find the Average Price via Weighted Averaging

Perpetual contracts in USDT work differently—they are quoted and calculated in USDT. This means the method for determining the entry average price is fundamentally different. Here, you multiply the volume of each purchase by its price, sum all the results, then divide by the total number of contracts.

This approach is more intuitive than with inverse contracts because you operate with a familiar currency (USDT) at each calculation step.

Calculation formula:

Entry average price = Total contract value / Total number of contracts

Where: Total contract value = (Quantity1 × Price1) + (Quantity2 × Price2) + (Quantity3 × Price3)…

Practical example:

Suppose you are trading BTCUSDT and decide to accumulate the position gradually. First entry: 1 contract of BTC at 10,000 USDT. Second entry: 2 contracts of BTC at 13,000 USDT per contract.

Calculation:

• (1 × 10,000) + (2 × 13,000) = 10,000 + 26,000 = 36,000 USDT
• Entry average price = 36,000 / (1 + 2) = 36,000 / 3 = 12,000 USDT

Your average entry price for the position is 12,000 USDT—this is a fair estimate of your accumulated portfolio’s cost.

USDC Perpetual Contracts: Dynamic Average Price and Calculation Cycles

USDC perpetual contracts have the most flexible system for calculating the entry average price. Here, the average price is a weighted average of your position over the current calculation cycle, and it can change as the position size increases.

A key feature of this product: at the end of each calculation cycle, the current mark price automatically becomes the new average entry price. This means the system constantly “recalculates” your average price, reflecting the actual market situation.

Calculation formula:

Entry average price = Total session value / Total trade size

Where: Total session value = (Trade price 1 × Trade size 1) + (Trade price 2 × Trade size 2)…

Practical example:

A trader opens a long position: 0.5 BTC at $50,000. After market analysis, they decide to increase the position and buy another 0.8 BTC at $51,000.

Calculation:

• Total session value = (50,000 × 0.5) + (51,000 × 0.8) = 25,000 + 40,800 = 65,800 USDC
• Entry average price = 65,800 / (0.5 + 0.8) = 65,800 / 1.3 ≈ $50,615.38

Thus, the average entry price is approximately $50,615.38, reflecting the real cost of your accumulated position considering all entry points.

Why Properly Calculating the Entry Average Price Matters

Understanding how to find and calculate the entry average price is crucial for effective portfolio management. This metric helps you to:

• Assess the actual profitability of your position at the current price level
• Identify optimal points for closing or adding to your position
• Avoid errors when analyzing multiple entries into a single position

Whether you’re using inverse contracts, USDT, or USDC perpetual contracts, accurate calculation of the entry average price is fundamental to successful trading. Regularly check this figure in the platform interface and use it when making decisions about position size and exit levels.