Number Of StocksPurchase Price

How to calculate average price of share?

When we start to invest in the stock market, one of the data that we are interested in learning to calculate is the average price at which we have bought the shares of that company, adding and including within this average price the commissions that we have been charged for the purchases. This way we can analyze when we begin to obtain real returns on that investment.

stock price average calculator

Many times, the investor buys shares of the same company for a certain time, at different prices; This strategy allows risk diversification over time, a very feasible prudent measure for investors who are beginning to immerse themselves in the world of finance.

Steps to calculate the average price of shares

To calculate the average price of the shares acquired, we must especially take into account the commissions we pay in our broker:

We will add all the purchases of shares of the company ( including the commissions that the broker has charged us ) and we will divide the result by the number of shares we own in the company.

Let's take an example:

Suppose we make purchases of XYZ shares :

  • 500 shares at 4 usd
  • 700 shares at 5 usd
  • 300 shares at 6 usd
Let's think that the purchase commission that the broker charges us is 10 usd in the three times that we have bought shares. Therefore, the total amounts of each purchase will be:
  • 500 shares at 4 usd: (500 x 4) + 10 = 2,010 usd
  • 700 shares at 5 usd: (700 x 5) + 10 = 3,510 usd
  • 300 shares at 6 usd: (300 x 6) + 10 = 1,810 usd

In total, we have paid 7,330 usd between the three purchases (2,010 + 3,510 + 1,810) for 1,500 shares , which means that its average purchase price is 4,886 euros (7,330 / 1,500).

To reduce the cost of these operations and begin to obtain a higher return on our investments, you can choose to analyze the commissions of your broker and investigate if there are cheaper brokers with which to operate .