Let say I’m trading nvida stock
- day1: buy 10shares, price = 100
- day2: sell 3shares, price = 200
- day3: buy 10shares, price = 200
on day3, what is the average buy price of the stock?
Two ways strike my mind:
1. (total buy amount on given period) / (total buy shares on given period)
= (10*100 + 10*200) / (10+10) = 150
2. counting on shares sold
- After selling some shares on day 2, its average buy price is still 100. Remaining shares are 7, so remaining buying amount is 7*100 = 700
- On day 3
- ((prev day's remain value) + (today buying value)) / (all qty)
- ((7*100) + (10*200)) / (7+10) = 158.82
Two values are different, I don’t see which one is correct.
I think both are logically correct…
Which one is the right way to calculate the average buy price? And if one is wrong, why it is wrong.