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Selling shares at different prices


MrPhoenix

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the 50 you sell will just be sold at the prevailing price., its not a case of which lot/tranche get sold.

 

So you buy 50 at £5 (£250)

Then buy 50 at £8 (£400)

 

You have spent £650

 

If you then sell 50 of them, and the current price is still £10 then (50x10 = £500) You will be left with 50 shares worth £10 = £500

 

If you then sell 50 of them, and the current price is still £4 then (50x4 = £200) You will be left with 50 shares worth £4= £200

 

 

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Thanks for your reply. 

 

So as I understand, once you pay the price for the shares, the only thing relevant is the average price of them all at the time, and how many you have? 

So If I bought 50 shares at £10 and 50 shares at £5 and the current price is £7.50, then I have 100 shares worth £750 and that's my break even point. I'm not at a 'loss' on the shares I paid £10 for. 

 

Am I getting that right? 

 

Kind regards

 

 

 

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The price you care about is the current price, and if you ahve bought at different prices then your current value of your holding is a blended price, or average of your purchases.


For example.

You buy 50 at £10 = £500 outlay and 50 shares

you buy 50 at £5 =  £250 outlay and 50 shares

 

you own 100 shares (=50+50 shares) and have paid £750 in total for them ( £500+£250 cost)

 

If the current price on the day is £7.50 then 100 shares x £7.50 = £750. You are at b/e (minus transaction costs)

If the price later moves down to £5 then £5 x 100 shares = £500 you have a book/paper loss of -£250 

If the price instead goes to £10  then £10 x 100 shares = £1,000 and you have a £250 paper profit. this can be released by selling.

 

 

But if you had £750 to spend in total, then you'd want to get the best price possible, so if you waited and bought all your shares when the price dropped to £5 then £750/£5 = 150. You now have 150 shares. If these then rose to £10 then 150x£10 = £1,500.

A profit of £750 on the initial stake of £750.

 

However it sounds like you should spend a bit of time paper trading, looking at the shares you are interested in, making a note in a journal, making a theoretical 'buy' and tracking how they would have performed over  a couple of months. This would give you a better idea :)

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