Diluted Cost
Calculation formula: Diluted cost = (∑Buying amount - ∑Selling amount - ∑Cash Dividends) / (Quantity)
Meaning: It refers to the capital preservation price (excluding commissions and fees) of a particular stock over the holding period, at which a user can break even by selling at this price. It calculated the profit and loss of each transaction (excluding cash dividends, etc.) during the holding period, taking both buying and selling changes into account. The calculation begins when a position is opened, and the cost will be reset when the position is closed. The calculation will start again when the position is reopened.
Average Price
Calculation formula: Average Price = (Average cost price from previous transactions x Quantity + Price of this transaction x Quantity) / (Total current holding quantity)
Meaning: When a user buys a stock, the cost price is the value of the buying price (excluding commissions and fees) divided by the quantity. The profit and loss from selling the stock are not taken into account during the holding period to prevent the impact of subsequent selling of the stock on buying cost. The calculation begins when a position is opened, and the cost will be reset when the position is closed. The calculation will start again when the position is reopened.
For example
A client has the following transactions on stock A:
March 1, Buys 10 shares of the stock at USD 239, holding 10 shares
March 2, Sells 5 shares of the stock at USD 245, holding 5 shares
March 3, Buys 10 shares of the stock at USD 240, holding 15 shares
March 4, Stock A pays out dividends of USD 150
The diluted cost is (239*10 - 245*5 + 240*10 - 150) / (10 - 5 + 10) = 227.67
The average price is (239/10*5 + 240*10) / (5+10) = 239.67