Average Calculator For Stock

Weighted Average Formula:

\[ Average = \frac{\sum (Price \times Shares)}{Total\ Shares} \]

Price ($):

Shares (count):

Price ($):

Shares (count):

Price ($):

Shares (count):

Weighted Average Price:

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1. What is Weighted Average Stock Price?

The weighted average stock price calculates the average price per share when you've purchased the same stock at different prices and quantities. It gives you a more accurate cost basis than a simple average.

2. How Does the Calculator Work?

The calculator uses the weighted average formula:

\[ Average = \frac{\sum (Price \times Shares)}{Total\ Shares} \]

Where:

$ Price $ — Purchase price per share ($)
$ Shares $ — Number of shares purchased at that price
$ \sum $ — Sum of all price × share products
$ Total\ Shares $ — Total number of shares owned

Explanation: This method weights each purchase by the number of shares, so larger purchases have a greater impact on the average price.

3. Importance of Weighted Average Calculation

Details: Knowing your weighted average cost is crucial for investment decisions, tax calculations, profit/loss analysis, and determining when to buy or sell additional shares.

4. Using the Calculator

Tips: Enter up to three different purchase prices and share quantities. At minimum, fill in the first price and shares. All prices must be positive numbers, and shares must be whole numbers greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: Why use weighted average instead of simple average?
A: Weighted average accounts for the quantity of shares purchased at each price, giving a more accurate cost basis that reflects your actual investment.

Q2: How many purchase entries can I calculate?
A: This calculator handles up to three different purchase entries. For more complex portfolios, you may need to use spreadsheet software.

Q3: What if I have fractional shares?
A: This calculator uses whole shares. For fractional shares, you would need to use decimal values and adjust the calculation accordingly.

Q4: Is this the same as dollar-cost averaging?
A: Dollar-cost averaging is the strategy of investing fixed amounts regularly, while weighted average calculates your actual average cost per share from those investments.

Q5: Can I use this for tax purposes?
A: This provides your cost basis, which is essential for capital gains calculations, but consult a tax professional for specific tax advice.