What is a Stock Average Calculator and How Does it Work?

Have you ever bought the same stock multiple times at different quantities and different prices? 

If yes, then you must have gone through this scenario: you bought a certain quantity of a stock at one price on one day. Later, on another day, you must have bought the same stock again but at a different price and quantity. 

Now, if you want to profit from this stock, how do you determine the total cost that you have incurred?

This is where a Stock Average Calculator steps in.

What is a Stock Average Calculator?

A stock average calculator is an online tool that helps you calculate the average price of a particular share that you have purchased multiple times at different prices and different quantities. 

It is a simple and user-friendly tool that asks basic information about your stock, such as the buy price and quantity to determine the average price of your stock.

How Does the Stock Average Calculator Work?

Request Input

First, the stock average calculator will ask you for some details about your stock. 

• Buy price – The price at which you purchased the share.
• Quantity – The number of shares you bought at the specified buy price. 

For instance, let us consider you purchased 200 shares of a stock, with each share priced at ₹15. Later, you purchased another 500 shares, with each share priced at ₹20.

Weighted Average Calculation

The weighted average calculation is based on the total cost and the total quantity of shares.

In our example, the calculation is as follows:

What Does the Weighted Average Price Mean?

The average price lets you know the average amount you have paid per share based on the multiple purchases at different prices and quantities.

So, if the current market price of the share is above ₹18.57, it means you will earn a profit. And if it is less than ₹18.57, you will end up making a loss.

Benefits of Using a Stock Average Calculator

• Simple and Easy to Use – The stock average calculator is user-friendly. If you have the essential information, you can get the average price in less than a minute.
• Scalability – You can input the buy price and quantity for any number of transactions. It is not limited to just two.
• Informed Decisions – By determining the average price, you can make well-informed buy and sell decisions.
• Reduces Errors and Saves Time – By using the stock average calculator, you can reduce a lot of manual errors and save a lot of time.

Wrapping Up

A stock average calculator is an online financial tool that helps you determine the average price of a particular stock you have purchased multiple times at different prices and quantities. Calculating this average price will help you make smarter and more confident buy or sell decisions during stock equity trading. Make simple steps count and turn them into valuable decisions!