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Average Price Formula:
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The stock average price represents the weighted average purchase price of your stock holdings. It calculates the effective price per share when you've purchased shares at different prices over time, helping you understand your overall investment cost basis.
The calculator uses the average price formula:
Where:
Explanation: This formula calculates the weighted average price per share, accounting for all purchases made at different price points and quantities.
Details: Knowing your average price is crucial for investment decision-making, profit/loss calculations, tax planning, and determining when to buy more shares or sell existing holdings.
Tips: Enter the total amount you've invested in USD and the total number of shares you own. Both values must be positive numbers. The calculator will compute your average cost per share.
Q1: Why is average price important for investors?
A: It helps determine your break-even point, assess investment performance, and make informed decisions about buying additional shares or selling at a profit.
Q2: How does dollar-cost averaging affect average price?
A: Dollar-cost averaging involves investing fixed amounts regularly, which can lower your average price during market downturns and smooth out purchase prices over time.
Q3: What's the difference between average price and current market price?
A: Average price is what you paid for your shares, while current market price is what the stock is trading for now. The difference determines your unrealized gain or loss.
Q4: Should I include brokerage fees in total cost?
A: Yes, for accurate average price calculation, include all transaction costs, commissions, and fees associated with purchasing the shares.
Q5: How often should I recalculate my average price?
A: Recalculate after every purchase to maintain an accurate understanding of your investment cost basis and current position.