If you buy/sell a stock at the different price levels you will see that the average price changes. So how does it change, and who decides it? Let’s understand with an example.
Assume you bought 10 shares of Tata Motors on 13/04/2022 and the other 20 shares on 15th April and sold 5 Qty on 17th and repurchased it on 20th at different prices as mentioned in the table.
Here the average price of the TAMO will be calculated as (Qty*price)
= (10400)+(20440)-(5463)+(25430) = 21235 divided by total Quantity i.e 50.
Your Avg price will be = 21235/50
= Rs. 424.70/-
Note:
- This is applicable for all including delivery & intraday
- This process of averaging follows the FIFO rule (First In First Out). Meaning, the shares which you have bought first would be considered first while selling
- FIFO is followed even in BTST (Buy Today Sell Tomorrow)
