PLz Guide me about share averaging !

[abhijitmuley10]

Res. Sirs / Madams

I need some guidence about share averaging from you . If i buy share at Rs.100 & sell for Rs.150 then my profit is Rs. 50 as well as my buying ave. is now Rs.50 (Purchase Price - Profit ).Now if that share is trading at Rs.80 & if i buy it what will be my average ? Will i have to buy same share below Rs.50 to take benefit of average ? I m confused about ave. plz guide me . Thnx

 

[rssheth]

First of All Why you Want to AVERAGE??

Its being said that AVERAGING is done By AVERAGE People

Just kidding

 

[rajeabc]

Res. Sirs / Madams

I need some guidence about share averaging from you . If i buy share at Rs.100 & sell for Rs.150 then my profit is Rs. 50 as well as my buying ave. is now Rs.50 (Purchase Price - Profit ).Now if that share is trading at Rs.80 & if i buy it what will be my average ? Will i have to buy same share below Rs.50 to take benefit of average ? I m confused about ave. plz guide me . Thnx

could you please elaborate what you want to ask ? once you sold you shares then there is no average. amount would be called profit/loss .
What kind of advantage you are looking for ?

 

[deneb]

I am assuming that you are averaging to reduce your purchase cost.Though I personally dont like averaging ,it works as follows.

Suppose you bought 100 shares of xyz company at Rs. 150.Your total investment is

100*150= Rs. 15000

Now you want to average as you have seen that the price of xyz company has come down to Rs.100.So you decide to buy 100 shares of XYZ Company again at Rs.100.So you pay

100*100= Rs. 10000

But you total investment in XYZ Company is

15000 +10000 = 25000

You have 200 shares of XYZ Company so the price of one XYZ share

25000/200 = Rs. 125

So you have brought down the price at which you are holding XYZ from Rs.150 to Rs.125.

Now for the problem part.Though you have reduced the purchase price from your first buy you have increased your total investment in the company from Rs.15000 to Rs.20000. So you have to keep this in mind before thinking of averaging.In my opinion if you are a trader use stoploss,if you are sure about the company and is willing to hold the stock for some time then only think about averaging.

Regards,