Jump to content

How should FIFO affect the remaining average price?


Recommended Posts

I recently asked IG a question about the FIFO netting method they use and how it affects the average price of your remaining position?  Maybe I will have better luck getting a clearer answer from the community.

I have the following example:

2 purchases: 

1st: 8 units @ price 110

2nd: 8 units @ price 100

Therefore average price is 105 for 16 units purchased.

If I sell 4 units at 100, I assume that this sale should be netted against the 1st purchase of 8 units @ price 110, effectively meaning that this purchase is now worth 4 shares @ price 110 and I have realized a loss of of (4 x -10) = -$40 which is reflected in my capital.

My portfolio  should be left with:

1st: 4 units @ price 110 (FIFO nets my sale of 4 units against my first purchase of 8 units @ price 110)

2nd: 8 units @ price 100

Therefore, the average price of the remaining 12 units is now 103.33.


I would like the community to let me know if this example is correct?  My issue is that, using the above example, when I sell 4 units in a real-life situation, IG does not adjust the average price of my position in my Portfolio.  IG continue to show my average price as 105. 



Edited by CJ_Hughes
the text format changed when it was posted
Link to comment

Hi @CJ_Hughes

Thanks for reaching out, 

Assuming this is for share trading, I think the term average price can be misleading. In reality it is more of a average purchase price/ or average cost price. This does not change with each sale because ultimately your profit will be determined by the market value of your shares less your book cost. Book cost is determined by average price x number of shares. 

Thus looking at your example, regardless of how many you sell. On average the shares cost you 105, i.e. When you sell 4 units, your average price remains 105. However your book cost will adjust from 1680 (105 x 16) to 1260 (105 x 12). 

Having said this the book cost is editable, and this will automatically change the average price. So should you prefer you are welcome to edit it on your end to reflect your preferred valuation. Please details on how to this from the following link: https://www.ig.com/uk/help-and-support/investments/share-dealing-and-isas/how-do-i-edit-my-book-cost

All the best, 



Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 29/01/23 03:20
  • Posts

    • Capital, win loss ratio. If you have a trading edge and you can consistently win 50% of your trades, so your winning 5 trades out of 10. So if your risking 1% of your capital per trade, out of your 10 trades 5 would be losers, so that’s 5% loss and realistically out of the 5 winning trades, some would make small profits, some break even and 1, 2 or 3 could run nicely IF you can let your profits run, basically your making money out of 2 trades out of the 10 trades (80/20 Rule Pareto principle) So a $20,000 acct risking 1% is $200 per trade, this will keep the trader with his trade risk based on being able to win 50% of his trades. A long term trend trader can win with 30% wining trade. Basically you need to know your numbers. Rgds Pete
    • Investing in stocks can be a great way to grow your wealth over time. However, there are different approaches that investors can take when choosing which stocks to buy. Two of the most popular approaches are growth investing and value investing. Growth Investing Growth investing is an investment strategy that focuses on buying stocks of companies that are expected to grow at a faster rate than the overall market. These companies are often in industries that are growing quickly, such as technology or healthcare. Investors who use this approach believe that these companies will be able to generate higher profits in the future, which will lead to higher stock prices. One of the main advantages of growth investing is that it can potentially provide higher returns than the overall market. However, it is also riskier than other investment strategies, as these companies often have higher valuations and more volatile stock prices. Value Investing Value investing is an investment strategy that focuses on buying stocks of companies that are undervalued by the market. These companies may be in industries that are out of favour or have recently experienced challenges, but they have strong fundamentals and a history of profitability. Investors who use this approach believe that these companies are undervalued and that their true value will be recognized in the future, leading to higher stock prices. One of the main advantages of value investing is that it can potentially provide lower risk than growth investing. However, it may also provide lower returns in the long run, as these companies may not have the same growth potential as companies in the growth investing category. Comparing Growth and Value Investing Growth and value investing are two different approaches to stock investing, each with its own advantages and disadvantages. Growth investing can potentially provide higher returns but is riskier, while value investing can provide lower risk but potentially lower returns. An investor may choose one approach or a combination of both. A portfolio that contains a mix of growth and value stocks can provide a balance of potential returns and risk. Conclusion Both growth investing and value investing can be effective ways to invest in stocks. The key is to understand the potential risks and rewards of each approach and to choose the one that aligns with your investment goals and risk tolerance. Analyst Peter Mathers TradingLounge™ 
    • I am a beginner, and I must say, there are a lot of rules to the trading game that one must abide by if they want to be successful.   Here, the writer mentions several basic rules for day vs swing trading.  However, I find that often times, the reasoning for these rules is not as  obvious for a beginner as it may be for an expert.   The 'why' factor if I may. For example, why must you have a large capital to trade with as a day trader? Because your positions must be large so that a small change in price will be augmented and turned into a large profit. Also, with such high risk, the margin will be specially high, given the trader is taking up large positions at a time.  Without a large amount of capital, positions may be forced to close due to funds being below margin requirements.  When this happens, you can expect to lose tons of cash, fast.  I learned the hard way. All the best, David Franco      
  • Create New...