Average Price aka Average Position price?

Hello T212 Team,

I have query on how you calculate average price of position on stock.

I have example MAC, where I bought 20+20+20+10 stocks.

Total Average is 23.80$, now I sold 60 for their average price, which is 23.95$. Remaining with 10 lowest priced MAC stock. 22.85$

However average price still shows average of 70 MAC stock combined. 23.80$

One would expect to show average price of current position rather historical average of all purchases. This gives completely wrong picture on actual gain/loss.

I sold 60 for 0.01$ gain baised on FIFO approach, their average was 23.956666 i sold for 23.95.

Remaining 10 are paid on 22.85, one would.expect Average price is 22.85 as i only have 10 stocks left via FIFO those are 22.85$ paid.

See screenshots below of the details:






@Vedran We calculate average price the industry standard way:

1 share at $10 & 1 share at $5 -> 2 shares at $7.5 avg price.

So even if I sell share 1 at price 20$ make profit. I remain 1 stock with average price 7.5$? Which we know is false as it is 5$ paid FIFO

Which of both stocks is sold at $20? You don’t know. So you can’t change the avg price in my opinion.

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@Vedran You would be suffering from the 2nd position but what about the first? Instead of buying at $10 & selling at $20, you’ve bought at $7.5 & sold at $20. It’s still the exact same thing.

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I was under impression stocks are bought/sold in FIFO, first in first out. Meaning if i have 10$ paid stock bought first and 5$ paid stock bought 2nd. If i sold 1 stock at 10$. I would be at 0$ profit. According to your system or industry i would be in gain 2.5$ which i dont see how as i still have my 5$ paid stock which even at 6$ is at profit. While industry would show i lost 1.5$

It doesn’t make sense as i sold my first bought stock at their average price. Meaning my remaining 10 are pure priced paid lesser. As I want to average down price.
But now my price is still average of 70 stocks rather then of those 10 paid at significantly lower prices.

On Revolut i used to buy down stock on dip, then sell older expensive stock once they got back and my average position price was lowered substantially and my % gain was shown adequately to the held stocks not compared vs average of old sold position…

Stocks are bought/sold in FIFO principles.
When you do capital tax gains, you use FIFO method.

@Vedran I think it all depends on your country’s tax rules what gain you have made. In the UK the matching rules require that, to calculate gain or loss, a unit of sold stock is first matched to 1) stock bought at any time on on the same day, then 2) any stock bought in the subsequent 30 days, then 3) all other purchases (made previous days) at their average price (so-called Section 104 holding). This means that the way Trading 212 reports works for sales of stocks that I do not trade the same day or repurchase within 30 days. There is no escaping the fact that as a UK capital gains taxpayer I must maintain my only careful records and cannot rely on gains as reported by a broker. The annual reports I receive from other brokers do not even attempt to tell me what capital gains I have made. They just report the values of purchases and sales. Thank heavens for Google sheets.

@David

Would it be possible to have then current position price? I would like to know my exact gain/loss to existing position, not to some total average using price of stocks sold years ago.

I clearly shown in MAC example that i had total average 23.80$ i sold 60 of my most expensive stocks, using average price for these 60, to not incur capital gain, aim was to lower my average position price. Which correctly I have 10 shares on price 22.85$.

However UI still shows 23.80$ which is average calculating sold 60+ 10 remaining.

Im month I buy new 10 , it will use again average od 60+10+10. Meaning those ghost 60 stocks which were sold will be evaluated indefinitely. Which doesnt make sense at all as i sold.those positions and clearly have 22.85$ stocks left.

I was always under impression that shares are bought via FIFO method? Is this incorrect? If so then my logic is false. But I state my logic on premise that FIFO method is applied.

No. At least in the UK, FIFO rules do not apply. It is more complicated. If you are interested, read here:

https://www.gov.uk/government/publications/shares-and-capital-gains-tax-hs284-self-assessment-helpsheet/hs284-shares-and-capital-gains-tax-2019

These rules are imposed to prevent people gaining a tax advantage by washing out gains, by selling and stock and repurchasing the next day.

I was referring to stock purchase. Capital gains in Cro are fifo…

@David

Ok so I googled a bit, it seems T212 is using Weighted Average method for calculating position.

It would be cool to have each person select method of preference.

FIFO/LIFO/Weighted average.

Croatia tax authorities use FIFO method, so does IRS. Possible many more EU countries.

I would like to be able to use history closed position for tax purposes. But as t212 uses weighted average position, it doesnt reflect correctly for my capital gains.

Would this be something possible to consider in future?

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Can confirm the Spanish Tax Authority (Agencia Tributaria) uses the FIFO method for calculating capital gains.

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