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Mon 21 Oct, 2013 10:33 pm
Question: How come the averaging down math doesn't make work out?
Bought ABC at following prices
1.95
1.70
1.55
1.50
1.25
1.10
- total 9.05 average per is 1.50
Actions:
Sold
1x 1.80 -> brings average down to 1.47
If selling another at
1.25- this brings the average back up.
Can someone explain why this is? The 1.25 should cancel the 1.10 and the 1.8 should cancel the 1.25.
@crayon851,
(9.05) / 6 = 1.5083
(9.05-1.8) / 5 = 1.45
(9.05-1.8-1.25) / 4 = 1.5
In each equation, the parenthetical expression is how much you've spent (net) on the shares you still own.
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