🥖 What is Average Cost Basis?
Imagine you're running a bakery.
On Monday, you bake 100 loaves at $10 each, and later that day, you bake 50 more at $12 each. You’ve now spent $1,600 for 150 loaves, so your average cost per loaf is $10.67 ($1,600 ÷ 150).
You don’t track which batch each loaf came from. Whether you sell 1 or 100, you just use that same average cost to calculate your profit.
This is how Gotrade’s Average Cost Basis works:
All purchases are averaged together, regardless of the day.
When you sell, the average cost is used for the shares sold.
The remaining cost basis is recalculated based on the remaining shares and value.
🧾 Example: Sell on a Different Day (With Remaining Shares)
Day 1 – Multiple Buys
Buy 100 shares at $10 → $1,000
Buy 50 shares at $12 → $600
Running Total
Shares bought: 150
Cost: $1,600
Average Cost Basis = $1,600 ÷ 150 = $10.67
Day 2 – Buy More
Buy 30 shares at $15 → $450
Updated Running Total
Shares bought: 180
Cost: $2,050
Average Cost Basis = $2,050 ÷ 180 = $11.39
Day 3 – Sell 120 shares
Cost basis for sale: 120 × $11.39 = $1,367
Remaining shares = 60
Remaining cost = $2,050 − $1,367 = $683
Final State
Remaining shares: 60
Final Average Cost Basis = Remaining cost / Remaining shares = $683/60 = $11.39