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Average Price Formula:
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Average price calculation determines the mean cost per share when multiple purchases have been made at different prices. It helps investors track their investment performance and make informed decisions about buying or selling shares.
The calculator uses the average price formula:
Where:
Explanation: This simple division gives you the weighted average price per share across all your purchases.
Details: Knowing your average share price is essential for determining your break-even point, calculating potential profits or losses, and making strategic investment decisions about when to buy more shares or sell existing holdings.
Tips: Enter the total amount of money invested in dollars and the total number of shares acquired. Both values must be positive numbers greater than zero for accurate calculation.
Q1: Why is average price important for investors?
A: It helps investors understand their cost basis, determine profitability, and make informed decisions about portfolio management.
Q2: How does average price differ from current market price?
A: Average price represents what you paid for your shares, while market price is what shares are currently worth. The difference determines your profit or loss.
Q3: Should I include transaction fees in total cost?
A: Yes, for accurate average price calculation, include all costs associated with purchasing shares, including commissions and fees.
Q4: How often should I recalculate my average price?
A: Recalculate after each purchase to maintain an accurate understanding of your investment position.
Q5: Can this calculator handle fractional shares?
A: Yes, the calculator accepts decimal values for both total cost and total shares, making it suitable for fractional share calculations.