# Average price calculation

Hi Evan,

I would like to clarify about the average price calculation
Day 1 : bought 5000 shares @ 0.945
Day 2 : bought 5500 shares @ 0.925
Day 3 : bought 10000 shares @ 0.94
Day 3 : same day sell 10000 shares @ 0.92

by right , the average price should be ( (50000.945) + (55000.925) ) / ( 5000+5500 )
which is 0.9345

but right now it was calculated as 0.744 … i would like to know how it’s being derived.

Please let me know if you need the actual stock name : the transactions was for SGX:JYEU and for my id : haditeo

Thank you

It is because StocksCafe is using averaging and not LIFO methodology in computing average price -> Calculation method for CLOSED

Also, for Day 3, I checked, your buy price was 0.54 instead of 0.94. Likewise the sell price was 0.52 instead of 0.92.

Day 1: Bought 5000 shares @ 0.945 => Total Shares 5K, Total Cost = 4725, Price per share = 0.945
Day 2: Bought 5000 shares @ 0.925 => Total Shares 10K, Total Cost = 9350, Price per share = 0.935
Day 3: Bought 10000 shares @ 0.54 => Total Shares 20K, Total Cost = 14750, Price per share = 0.7375

When you sell at Day 3, it does not affect the average price. so, average price is 0.7375 ~= 0.744 (StocksCafe actually also factor in fees which we skipped here for simplicity).

Cheers,
Evan

Thank you Evan

1 Like

sorry, but how to derive 0.7375 ?

Let’s say :
at end of Day 3 : i sold 10000 shares @0.52 =>

Day 4 : bought 10000 shares @ 0.51
Day 5 : sold 10000 shares @0.53 , so at this point how many shares do i have ? , total cost ?

does it mean that if i keep buy and sell the same total number of stocks, then will it average down ?

Thank you

Day 1: Bought 5000 shares @ 0.945 => Total Shares = 5K, Total Cost = 4725, Price per share = 0.945
Day 2: Bought 5000 shares @ 0.925 => Total Shares = 10K, Total Cost = 9350, Price per share = 0.935
Day 3: Bought 10000 shares @ 0.54 => Total Shares = 20K, Total Cost = 14750, Price per share = 0.7375

At end of Day 3 : i sold 10000 shares @ 0.52 => Total Shares = 10K, Total Cost = 7375 (i.e. 0.7375 x 10K), Price per share = 0.7375 (Price per share is not supposed to change when selling)

Day 4 : bought 10000 shares @ 0.51 => Total Shares = 20K, Total Cost = 7375 + 5100 (i.e. 0.51 x 10K) = 12375, Price per share = 12375 / 20K = 0.61875 (Here, you average down because the 0.51 < 0.7375)

Day 5 : sold 10000 shares @0.53 => Total Shares = 10K, Total Cost = 6187.5 (i.e. 0.61875 x 10K), Price per share = 6187.5 (Price per share is not supposed to change when selling)

Hi Evan,
So the average share price is only affected when one buys but the average price stays the same when one sells regardless of the sale price.
This means a profit or loss on sale does not affect the average share price shown. Is that correct.

Kevin

Hi Kevin,

Yes, that is correct.