How to Calculate Average Trade Price

Here's a quick, easy way to figure out the average price you paid for a stock.

By Lyle Daly – Updated Sep 9, 2024 at 1:11 PM EST

Key Points

To calculate your average trade price, add all purchase prices and divide by the number of trades.
Use weighted average trade price calculation if share quantities vary per purchase.
Weighted averages provide a more accurate reflection of your investment costs over time.

With stocks that you've invested in multiple times, it's useful to know how to calculate average trade price. This information can help you track your gains and losses over time.

There are different calculations to use depending on whether you bought an equal number of shares each time. If so, you can simply calculate the average trade price. But if not, you need to calculate a weighted average trade price, because a simple average of the prices won't be accurate. Keep reading to learn how to do both.

Loading paragraph...

A calculator and pen sit on financial paperwork. — Source: Getty Images

Loading image...

How to calculate average trade price

If you bought the same number of shares with each trade, then you only need to calculate the average trade price. It's easy enough to do this.

Here's how:

Add up all the prices of the stock each time you bought it.
Divide by the number of trades you made.

For example, imagine that you buy 50 shares of a stock at $100, and then another 50 shares at $120. Adding $100 and $120 gives you a total of $220. Since you made two trades, you divide by two, for an average trade price of $110.

Loading paragraph...

Average price formula

Here's the formula used to calculate the average trade price in the example above.

Loading image...

How to calculate the weighted average trade price

If you didn't buy the same number of shares in each trade, then you need to calculate the weighted average trade price. This takes into account the number of shares you purchased with each trade.

Loading paragraph...

A share of stock represents ownership in a company, entitling holders to a portion of its assets, profits, and voting rights.

Loading definition...

Let's say you buy 50 shares of a stock in one trade, and then 100 shares the next time. The price you pay the second time around will affect your average trade price more, because you bought twice as many shares.

Did you know...

Loading callout...

Here's how to calculate the weighted average trade price:

List the prices you paid for the stock, along with the number of shares you acquired in each transaction.
Multiply each transaction price by the corresponding number of shares you bought.
Add the results from step 2 together.
Divide by the total number of shares purchased.

Putting these all together in a mathematical formula, we have:

Loading paragraph...

Loading image...

To show exactly how this works, let's look at an example. Let's say you've been buying shares of Apple (AAPL -0.26%) for several years. You've purchased a total of 100 shares in four separate trades.

Loading paragraph...

Trade	Share price	Number of shares
1	$65	35
2	$90	30
3	$130	20
4	$150	15

Loading table...

Here are the results when you multiply the share prices by the number of shares purchased:

Trade	Share price	Number of shares	Total trade amount
1	$65	35	$2,275
2	$90	30	$2,700
3	$130	20	$2,600
4	$150	15	$2,250

Loading table...

Adding the total amount of each trade gives us $9,825. After dividing that by the 100 shares purchased, we have a weighted average trade price of $98.25 per share.

What if you had simply added the share prices you purchased at and divided by the number of trades? The sum of $65, $90, $130, and $150 is $435. Divided by four trades, the average would be $108.75. That's why it's important to calculate the weighted average, because otherwise, you won't get an accurate result.

Loading paragraph...

Returns

Returns are the difference between the initial price of an asset and the dollar value that has been generated after ownership has ended.

Loading definition...

Now you know how to calculate your average trade price and weighted average trade price based on the price you paid for a stock and the number of shares you purchased. You can find this information in your account or on your broker statement. If your statement doesn't provide the clarity you need, it may be time to find a new one - - visit our broker center to compare options.

Loading paragraph...

About the Author

Lyle Daly is a contributing Motley Fool stock market analyst covering information technology and cryptocurrency. Lyle has been a contributor at the financial services company since 2018. His work has been featured on USA Today, Yahoo Finance, MSN, Fox Business, and Nasdaq. Before joining The Motley Fool, he wrote for financial brands including Intuit.

TMFLyleDaly

@LyleDaly

Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.