First Part of the query has already been answered.
Let me try the second part. If you buy 5,00,000 shares at Rs.150.00, your average will be Rs.150.01 (150.0099....).
Cheers
The impact of average falls in the order 50% (first average),33% (second
average),25% (3rd average) and so on.So averaging once or twice in a day
for intraday traders is OK, but is not a nice practice in LT or ST.
In order to have 50% impact every time we have to buy the number
of stocks we hold.
Let me illustrate with this example:
Code:
Shares cost Total cost Average
100 100 10000
100 80 8000 90
200 60 12000 75 (90+60)/2....50% impact
400 40 16000 57.5 (75+40)/2 ....50% impact
Total 800 cost: 46000 AVE:46000/800= 57.5
If you average 100 shares each at every averaging point ,the impact reduces to
50%....33%.....25%......20% .......so on.Hence it is not recomded after first TWO
or THREE averages.