Understanding value of shares held in FT

First Time Investing 🐣
1

Hi,

I have had problems understanding the calculations used to show the profit/loss in Freetrade. Could somebody explain why my maths in wrong in my example below?

The FT app shows this:
Stock: AT&T
Buy : £486.26
Buy: £88.32
Sell: £286.17
Current Value: £324.03
Profit/Loss: £14.48

But if I add up and then subtract the individual trades I get:
(486.26+88.32)-286.17=288.41

Why does Freetrade tell me my investment has a value of £323? The USD/GBP did not nose dive over the past month.

Regards, S

2

Likely because your buys and sells were all at different stock prices.

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3

If you think of it as number of stocks instead of £ value it makes more sense. Simplified example below…

You buy 10 shares @ £10 =
total shares 10, total invested £100, current value £100

Share price increases to £12
Current value is now 10 * 12 = £120

You buy 5 shares @ £12 for £60 total
Total shares 15, total invested £160, current value £180 (15 * 12)

Share price increases to £20
Current value is now 15 * 20 = £300

You sell 10 shares @ £20 for £200
Total shares 5, total invested £160, gains realised £200, current value £100

Your calculations above are ignoring share price changes.

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4

Thanks for the explanation and I understood what you wrote, but now I am confused a bit more with what Freetrade app reports.

I understood how the current value is calculated. What I do not get is how this differs so much from what I bought and sold.

My values are for the whole transaction at that moment in time - these are historical events - and these values cannot change - What I paid was what I paid. If I bought an apple for £1 today then tomorrow I still bought the apple for £1 regardless what the greengrocer’s new price is.

5

I believe the prices are also calculated on a first bought, first sold principle.

So in the above example, the first 10 shares sold cancelled out the first 5+5 bought, so the change in value of the remaining shares is 5*(£20-£12) = £40 and you’ve already made a profit of 10*(£20-£10) = £100.

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6

Thanks.

Glad to know how each tranche is sold. FIFO makes sense

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