Explainers

Buy Average Calculation

April 7, 2021

Buy Average Calculation

Buy average will be calculated based on the First In First Out (FIFO) method for the delivery trades, the shares which were bought first will be netted-off against the sell transaction that you make.
Buy average includes the brokerage and other charges which were levied on a given transaction. This will help you to know the Break-even price in order to book profits.

Please refer to the below example to understand the logic.

Since the shares which were bought on 12-Feb-2021 act as the First In, the same will be debited from your holdings when you make a sell transaction, and the updated average price will be 22.045 for the remaining 300 shares.

If a particular stock is bought multiple times in a day, then all the buy transactions will be averaged and will show up the day’s weighted average price.

Attached the example below.

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