Perpetual futures | What is Index Price in Future trading?

1. What is the Index Price?

The Index Price represents the Spot market price of an underlying asset. It is calculated using prices from multiple major spot exchanges and weighted according to their configured weights.

The Index Price is an important component of the Mark Price. By aggregating prices from multiple spot markets, it helps reduce the impact of price fluctuations or abnormal market conditions on any single exchange and provides a more stable and reliable reference for Futures trading.

Because spot prices may vary across exchanges, the Index Price may differ from the spot price displayed on any individual exchange.

 

2. What makes up the Index Price?

Toobit's Index Price is primarily determined by the following factors:

• Spot price: Real-time spot prices for the underlying asset collected from multiple major cryptocurrency exchanges.

• USDT-equivalent price: For spot trading pairs quoted in currencies other than USDT, Toobit converts the prices into their USDT equivalents using real-time exchange rates.

• Exchange weight: Each price source is assigned a weight based on its market activity, which is then used to calculate the final Index Price.

Toobit's index components are sourced from multiple major cryptocurrency exchanges, including but not limited to Toobit, Binance, OKX, Bybit, Bitget, Coinbase, KuCoin, and MEXC. Depending on market conditions for each trading pair, Toobit may select different price sources and trading pairs, including USDT-, USDC-, and USD-quoted pairs.

You can visit the index information page to view the Index Price and price sources for each trading pair.

Toobit may adjust index components and their weights based on market conditions. Such changes may be made without prior notice.

 

3. How is the Index Price calculated?

3.1 Collecting exchange prices

Toobit sources real-time spot prices from multiple major cryptocurrency exchanges to provide accurate and reliable market data.

3.2 Calculating exchange weights

Toobit selects appropriate price sources for each trading pair based on market conditions and assigns a corresponding weight to each source.

The total weight of all price sources equals 100%.

3.3 Calculating the Index Price

The basic formula is:

Index Price = (Spot Price of Exchange A × Weight of Exchange A) + (Spot Price of Exchange B × Weight of Exchange B) + ... + (Spot Price of Exchange X × Weight of Exchange X)

3.4 Example

Example:

Using BTCUSDT as an example, assume that at a certain moment its index components, component prices, and weights are as follows:

 

 

In this example, the BTCUSDT Index Price is $80,052.95, calculated as follows:

Index Price = ($80,046 × 20%) + ($80,048 × 15%) + ($80,056 × 20%) + ($80,058 × 15%) + ($80,060 × 15%) + ($80,051 × 15%)

= $80,052.95

 

4. Price protection mechanism

To reduce the impact of abnormal prices, delayed data, and exchange connectivity issues on the Index Price, Toobit monitors its price sources and may apply price protection measures when necessary.

4.1 Abnormal price filtering

• If the spot price from any exchange deviates by more than 5% from the median price of all sources, that price will be excluded from the Index Price calculation. It will be included again once the deviation falls back within 5% of the median.

• When calculating the median, all exchanges with non-zero weights are included, regardless of whether they have been temporarily excluded from the Index Price calculation. In extreme cases, if the spot prices of all exchanges deviate by more than 5% from the median price, the weights of excluded exchanges will be gradually redistributed among the remaining included exchanges until only one exchange remains. Exchanges with larger deviations from the median are excluded first.

4.2 Data update issues

If Toobit is unable to obtain data from a price source, or if the source has not updated its data for more than 10 minutes, its weight will be temporarily set to zero.

If the price from a source deviates by more than 5% from the median price, that source may also be temporarily excluded from the Index Price calculation.

4.3 Extreme market conditions

During extreme market conditions, abnormal market liquidity, or significant disruptions affecting price sources, Toobit may adjust the price sources, weights, or other relevant parameters used to calculate the Index Price in order to maintain its stability and reliability.

 

5. "Last Price protection" mechanism

When a stable and reliable reference cannot be obtained for the Index Price and Mark Price, Toobit may activate the "Last Price protection" mechanism until normal conditions are restored.

Under this mechanism, the Index Price is temporarily updated based on the latest traded price of the Futures contract within a specified range. The adjusted Index Price is then used as a reference for calculating the Mark Price, unrealized P&L, and liquidation notification levels.

This mechanism helps reduce the risk of unnecessary liquidations during abnormal market conditions.

 

FAQ

1. What is the difference between the Index Price and the Last Price?

The Last Price reflects the actual execution price in the Toobit Futures market, while the Index Price is a reference price calculated based on Spot prices from multiple major cryptocurrency exchanges. Therefore, the two prices may differ.

2. Does the Index Price affect liquidation?

Yes, indirectly. The Index Price is an important component of the Mark Price calculation. Since the Mark Price is used to calculate unrealized P&L and determine whether a position should be liquidated, the Index Price can indirectly affect position risk assessment.

3. Will the Index Price always match the Spot market price?

Not necessarily. The Index Price is calculated by weighting prices from multiple spot markets, so it may differ from the spot price displayed on any individual exchange.

4. Why can Toobit's Index Price differ from other exchanges?

Different exchanges may use different price sources, index components, weights, and calculation methodologies. As a result, Index Prices may vary across platforms.

Please refer to the Index Price displayed on the Toobit platform.

 

Disclaimer and Risk Warning

The trading tutorials, information, and examples provided by Toobit are for educational and informational purposes only and do not constitute financial, investment, or trading advice. Cryptocurrency trading involves significant risks and may result in loss of funds. The information and examples provided are for reference only and do not guarantee any returns. Please conduct your own research, fully understand the relevant products and associated risks, and make trading decisions based on your own risk tolerance. Toobit is not responsible for any trading decisions made based on this information or for any losses resulting from such decisions.