Weighted vs Un-Weighted Prices | Bitcointalksearch.org

Harley997

sr. member

Activity: 266

Merit: 250

Quote from: MrDrKJ on May 07, 2014, 02:03:17 PM

I'm having trouble discerning the difference between weighted and unweighted prices that I'm seeing around. A lot of analytics sites say they show the weighted prices, but I'm not precisely sure what that means. Can somebody describe the difference for me? From my current understanding, I can execute a trade at the non-weighted price but the weighted price is what will effectively be used once the order books are all processed. Is that totally wrong? Thanks a lot for the clarification.

A weighted price will take the account of volume each price point has. It will give weight to each price point in proportion to the volume of each price.

An unweighted price is simply an average of all the price points in question.

MrDrKJ

newbie

Activity: 2

Merit: 0

Thanks for the clarification. So if I sell 10 BTC on a market and the 'price' is $429 and the 'weighted price' is $440, what exactly happens? Huh

Tron

full member

Activity: 588

Merit: 107

Your trade should execute at the agreed upon price.

Weighted and un-weighted is simply to get a better picture of the 'real' price. Let's say one trade happened at $500.00 but it was only for 0.00001 BTC. Where another trade happened at 445.00 but it was for 12.0 BTC.

What is the current price?

Is it the last trade ($500 or $445), or is it mostly $445 and a tiny bit of $500. A weighted price takes into account the quantity of BTC traded.

The general idea is that it takes the volume of trades into account to arrive at a price instead of allowing a tiny trade at a higher (or lower) price to move the price.

A weighted price is also important when looking at the price across multiple trading sites. A site with very low trading volume can be 'lightly weighted' into the price calculation. While a high-volume site can be 'heavily weighted' into the price calculation.

Tron

MrDrKJ

newbie

Activity: 2

Merit: 0

I'm having trouble discerning the difference between weighted and unweighted prices that I'm seeing around. A lot of analytics sites say they show the weighted prices, but I'm not precisely sure what that means. Can somebody describe the difference for me? From my current understanding, I can execute a trade at the non-weighted price but the weighted price is what will effectively be used once the order books are all processed. Is that totally wrong? Thanks a lot for the clarification.

Topic: Weighted vs Un-Weighted Prices (Read 499 times)