Calculating the Indices: Our Formula

Intro to Marketplace

There are already over 30 digital currency exchanges operating worldwide with new ones being launched everyday. It is a very competitive landscape that evolves on a daily basis. That is where we come in, we analyze the significance of each exchange and only use the legitimate ones in our calculations.

The factors that lead to our decision on whether or not to include a specific exchange are:

  1. Amount of volume
  2. Deposits appear to be working well
  3. Withdrawals appear to be working well
  4. Significance within community

Its not a perfect science and we make the decision based on our own best judgement. If you feel an important exchange is missing from an index, email me at matt@coinprices.io and I will look into it personally.

Fee Structures affect Volume Numbers

Since digital currency exchanges are competing with each other for users, many have no trading fees or have implemented a maker/taker fee structure. A maker/taker structure incentivizes large players to place buy orders and sell orders on an exchanges order books in return for negative fees. Essentially the exchange is paying for large coin holders to provide volume on their exchange. On exchanges with no trading fees, automated trading bots execute large amounts of small trades attempting to profit on even the smallest price movements.

Both of these fee structures result in inflated volume numbers, and make calculating a weighted average problematic. Logic dictates, that in a free market, exchanges will constantly compete to inflate their volume numbers as much as possible, mainly through the two techniques explained above. For that reason, we have chosen not to use a weighted average for our indices.

Our process:

  • Each exchange is pinged at a set interval and an average of the exchanges last price is calculated. This is displayed live.

alt text for image

  • Then we take the average of our averages on a daily basis, and that price is plotted on our 30 day graph. Note: When a coin is first implemented, it will take 30 days for the graph to fill out as data is collected.

alt text for image

  • All exchanges included in each index are listed in the table below the live index price. The table lists their volume numbers in both absolute and percentage figures as well as the last price of the individual exchange.

alt text for image

  • The highest price and lowest price seen at any of the exchanges, in the last 24 hours, is also listed. This, in conjunction with the percentage change over the last 24 hours, gives you a solid understanding of the day range of the specific index.

alt text for image

Please let us know your thoughts on our process and any suggestions you might have, in the comment section below.

Thanks,

The CoinPrices Team