Although calculating Average Price seems straightforward, there are a few ways to do this.
What is Average Price?
Average Price is defined as the weighted average amount paid for shares.
This is only calculated on buys.
Sell orders do not impact Average Price.
Transferred in assets do not impact Average Price.
Wash sales do not impact Average Price.
How is this Average Price calculated?
Average Price = weighted average amount paid for shares, calculated on buys only
The Average Price will not change due to selling part of your position.
Average Price will reset only once you sell out your entire position.
Average Price is separate from Cost Basis (we’ll define this below) and is not used for tax reporting purposes. It’s simply a metric used to help you estimate your unrealized gains.
What is included in Average Price, and how does it work when I trade?
Average Price calculations include all purchases (including fractional buys), as well as dividend reinvestments. Average price updates after each purchase and dividend reinvestment, on a weighted basis.
When you sell out your entire position, the Average Price resets.
Examples for crypto Average Price display and stock Average Price display*:
Crypto Average Price Display Example:
Stock Average Price Display Example:
Cost Basis
Total cost basis, or total cost, is the original value of an asset at the time it was acquired. Cost basis is only available for equities, and is not available for alts or crypto.
Average cost basis = weighted average amount paid for shares for open lots, adjusted for sales, wash sales, and corporate actions.
Pending sales and purchases may not be fully reflected until settlement.
What is Cost Basis used for?
Unrealized gains or losses.
Realized gains or losses.
How are unrealized gains/losses calculated?
An unrealized gain or loss is the increase or decrease in the value of an investment that hasn’t been sold yet.
It's "unrealized" because the gain or loss only becomes real, for tax purposes, when the investment is sold.
Unrealized gains = Current value - Total cost basis for the lots open.
How are realized gains/losses calculated?
Realized gain or loss is the profit or loss made when an investment is sold.
It’s “realized” because the gain or loss becomes actual and is therefore potentially subject to taxation.
Realized gains = Value sold - Total cost basis for the lots sold.
Understanding the cost basis for your investments is important for tax purposes.
For other information about your Portfolio Metrics, please see our FAQ on all portfolio terms for definitions.
Cost Basis vs. Average Price Paid
Cost basis is used for tax purposes, and includes buys, sells, corporate action activity, or a wash sale. Average price paid just includes buys.
The default method for your Public account is MinTax, which sells the tax lot of the position with the lowest tax consequences first. Your cost basis is tracked in tax lots based on the date they are purchased. Tax lots are used to track the shares and the cost basis when sold for realized gains/losses. You can see more details on your realized and unrealized gains/losses in the cost basis view.
*All images shown are for illustrative purposes only.