Complete Guide to Calculating the Average Price of Derivative Positions

Trading derivatives requires mastering the calculation of average entry prices. Different types of contract products have completely different methods for calculating average prices, and getting them wrong can directly impact risk management and profit assessment. This article breaks down the calculation methods for the three mainstream products: inverse contracts, USDT perpetual contracts, and USDC perpetual contracts, helping you quickly grasp the essentials.

Inverse Contract Average Price Calculation — USD Quotation Mode

Inverse contracts are quoted in USD but settled in cryptocurrencies (such as BTC), making them a common tool for traditional futures traders. Because the quotation currency and settlement currency differ, the average price calculation logic is unique.

Calculation formula: Average Entry Price = Total Contract Quantity ÷ Total Contract Value

Where: Total Contract Value = (Quantity1 ÷ Price1) + (Quantity2 ÷ Price2) + (Quantity3 ÷ Price3) …

Practical example: A trader opens a BTCUSD inverse position twice. The first time, they buy 50 contracts at $10,000; the second time, they buy 50 contracts at $15,000.

Calculation steps:

• Total Contract Value = (50 ÷ 10,000) + (50 ÷ 15,000) = 0.005 + 0.00333 = 0.00833 BTC
• Total Contract Quantity = 100 contracts
• Average Entry Price = 100 ÷ 0.00833 ≈ $12,000

This indicates your position cost is aligned with a $12,000 market price.

USDT Perpetual Contract Average Price Calculation — Intuitive Quotation Mode

USDT perpetual contracts are quoted and settled in USDT. The calculation logic is the most straightforward and is also the easiest for beginners to understand.

Calculation formula: Average Entry Price = Total Position Value ÷ Total Contract Quantity

Where: Total Position Value = (Quantity1 × Price1) + (Quantity2 × Price2) + (Quantity3 × Price3) …

Practical example: A trader opens a long position on BTCUSDT twice. First, they buy 1 contract at $10,000; then, they buy 2 contracts at $13,000.

Calculation steps:

• Total Position Value = (1 × 10,000) + (2 × 13,000) = 10,000 + 26,000 = 36,000 USDT
• Total Contract Quantity = 3 contracts
• Average Entry Price = 36,000 ÷ 3 = $12,000

The average price calculation for this type of contract is simply a weighted average, making it very intuitive.

USDC Perpetual Contract Average Price Calculation — Cycle Settlement Mode

USDC perpetual contracts have the most complex average price calculation rules. They maintain an opening average price within each settlement cycle, and adding to the position during the cycle can influence the average. When the cycle ends, the mark price redefines the average price baseline.

Calculation formula: Average Opening Price During Trading = Total Position Value ÷ Total Contract Quantity

Where: Total Position Value = (Trade Price1 × Quantity1) + (Trade Price2 × Quantity2) …

Practical example: Trader A holds a 0.5 BTC long position, entered at $50,000. Confident in the market, they add to the position with an additional 0.8 BTC at $51,000.

Calculation steps:

• Total Trade Value = ($50,000 × 0.5) + ($51,000 × 0.8) = 25,000 + 40,800 = 65,800 USDC
• Total Contract Quantity = 0.5 + 0.8 = 1.3 BTC
• Average Opening Price During Trading = 65,800 ÷ 1.3 ≈ $50,615.38

Key point: When the cycle ends, the previous average is reset to zero, and the mark price becomes the new baseline.

Core Differences in the Average Price Calculations of the Three Contract Types

The main differences in how these products calculate average prices lie in how they combine quotation and settlement currencies:

• Inverse contracts: USD quotation ÷ cryptocurrency settlement → divide first, then divide again
• USDT perpetual: USDT quotation and settlement → weighted average
• USDC perpetual: Similar to USDT but with a cycle reset mechanism → weighted average + cycle reset

Mastering these three methods allows you to accurately assess your position costs and manage risks effectively. Choosing the right contract type for your trading style enables better execution of your trading strategies.