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developers:websocket:pricing [2025/03/14 22:36] – [Converting Price Differences to Cash Value] chad | developers:websocket:pricing [2025/03/14 22:39] (current) – [Converting Price Differences to Cash Value] chad | ||
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- | ===== Understanding Price Representation ===== | ||
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- | The WebSocket API provides prices exactly as published by the exchange, using a **decimal format**. However, understanding price movement requires knowledge of **minimum price increments** and **point value calculations**. | ||
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- | ===== Minimum Price Increment ===== | ||
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- | Markets do not trade at arbitrary price levels; instead, they move in predefined steps known as the **Minimum Price Increment**. This defines the smallest amount by which a price can change. | ||
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- | For example, if a market has a **MinPriceIncrement** of **25**, price levels would move as follows: | ||
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- | * **4000.00** | ||
- | * **4025.00** | ||
- | * **4050.00** | ||
- | * **4075.00** | ||
- | * **4100.00** | ||
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- | This ensures that all price movements align with the market’s allowed increments. | ||
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- | *Reference: | ||
===== Understanding Price Representation ===== | ===== Understanding Price Representation ===== | ||
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To determine the cash value of a price movement, use the **Point Value**. This represents the dollar value of a single price unit. | To determine the cash value of a price movement, use the **Point Value**. This represents the dollar value of a single price unit. | ||
- | The formula is: | + | Formula: |
- | **(Price2 - Price1) × PointValue = Cash Equivalent** | + | '' |
- | For example, if **PointValue** is **0.5** (as used in the ES market): | ||
- | * **Price1 = 4200.00** | + | Example: |
- | * **Price2 = 4225.00** | + | |
- | * **Point Value = 0.5** | + | |
- | | + | < |
+ | Price1 = 4200.00** | ||
+ | Price2 = 4225.00** | ||
+ | Point Value = 0.5** | ||
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+ | | ||
+ | </ | ||
This means a move from **4200.00 to 4225.00** corresponds to **$12.50 per contract**. | This means a move from **4200.00 to 4225.00** corresponds to **$12.50 per contract**. | ||
*Reference: | *Reference: | ||
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