Cost Basis Calculation Error In App

During the past month i have noticed a small detail about individual stocks ‘Investment Gain/Loss’ in the app.
I average down into stocks on a regular basis and never normally sell. However with the recent volatility i trimmed a couple of positions to lock in some gains made during March.

The problem occurs when you sell stocks the app seems to sell from oldest held stock first then subtracts that price from your “Avg. price per share”

In my averaging down method my older stocks usually have a higher price per share therefore when i sell and effectively get rid of the older higher price shares it means my avg price per share decreases even if the price i sell at is lower than the original price I bought at.
This is very deceiving giving you a better average in app
Example,

Avg Price per Share £65.7362

Now i went to the trouble of calculating out my average price in my portfolio analysis google sheet using transaction history in Google sheets.

Average Price £67.09
Even with dividends included this is still deceiving to overall Profit/Loss calculations.

I would welcome any feedback or debate as to wether im taking this too seriously or have made any errors. I just hope this will help to improve the analytics overall in the app.

6 Likes

I completely agree - raised this previously in-app. The way this works currently is confusing and more complicated than the alternative. Selling a portion of a holding shouldn’t change your average buy price.

1 Like

I did raise this also in App but was sort of disregarded hence the post here.

Its just for in future when i intend to be investing much larger sums the small errors get to quite big monetary sums. I don’t want to keep having to update a google sheet manually every transaction.

2 Likes

It’s definitely a mistake for FT to use this method of calculating average buy price. It makes perfect sense if you are only buying, but as soon as you sell then the average buy price should stay the same.

Instead of using every share you buy in their average calculation, which mandates choosing to remove some specific shares from the calculation when you sell. It would be much better to use a running average. So when you buy more shares they calculate the new average from the old average and the new shares purchased. Then when you sell part of your holding the average buy price is unaffected.

4 Likes

Its maybe a way to discourage trading more it definitely stopped me adding to positions until i was sure exactly if i was averaging down or up

I thought I was going crazy as to why my average price was higher than it should be. With this miscalculation wouldn’t this directly affect my investment gains/loss? Unless I’m missing something and that’s using some other calcuations.

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