Help on AVERAGING

[uasish]

My own method := As Price normally never retraces to past old high price ,in forth coming months,so we may have to average.
1)Do utilise that holding to Short at every chart signals in Intraday (to bring down cost).
2)At every HL identification in EoD ,(when the falling knife has rested )buy double to get out near Pivot high the new Qtys,and release some Qty from old holdings. (Say the profit in 2nd purchase is Rs 500.00 and if we sell 10 qty from old whose cost was Rs 50.00 higher than present price then in 2nd trade no profit no loss but our old Qty is reduced.)

 

[yasirdxb]

     Shares     cost   Total cost  Average    Cost-AVG
        100        100      10000         -             -
        100         80        8000        90             10
        200         60       12000       75             15
        400         40       16000       57.5          17.5


Total  800          cost: 46000    AVE:46000/800=  57.5

By opting AVERAGING the gap between ORIGINAL cost and AVERAGE
cost is increasing as seen from above example.

So it is not advisable to AVERAGE after couple of ADDs.

When I tried doubling up at the first step,I end up with 1500 shares spending somewhat double of your cost at 82,000.00 but only a slightly better average prices. by the way, what do you think about arithmetic averaging?

100 100 10000 100
200 80 16000 86.66
400 60 24000 71.42
800 40 32000 54.66

1500 82000

Yasir.

 

[uasish]

This Thread is in a Wrong Section.

 

[columbus]

When I tried doubling up at the first step,I end up with 1500 shares spending somewhat double of your cost at 82,000.00 but only a slightly better average prices. by the way, what do you think about arithmetic averaging?

100 100 10000 100
200 80 16000 86.66
400 60 24000 71.42
800 40 32000 54.66

1500 82000

Yasir.

Arithmetic averaging after 3 or 4 ADDs has not much impact.

         100      100    10000
         100       80     8000
         100       60     6000
         100       40     4000 AVERAGE
         400    TOTAL    28000       70

         100      100    10000
         100       80     8000
         100       60     6000
         100       40     4000
         100       40     4000 AVERAGE
         500    TOTAL    32000       64

         100      100    10000
         100       80     8000
         100       60     6000
         100       40     4000
         100       40     4000
         100       40     4000 AVERAGE
         600    TOTAL    36000       60

         100      100    10000
         100       80     8000
         100       60     6000
         100       40     4000
         100       40     4000
         100       40     4000
         100              4000 AVERAGE
         700             40000       57

In the first case 3 ADDS were taken into consideration.Later on AVERAGING
done by increasing adds at the same level (almost 60% less than the original
cost).The impact keeps on decreasing 70-64-60-57,rather it approaches
SLOWLY towards the level at which your are averaging.

AVERAGING Penny Stocks is a big NO.