Average cost
Depending on what version of the app you’re using, you’ll see either the following average cost calculation or the previous average cost calculation when looking at stocks.
Average cost calculation
Robinhood defines average cost as the book cost basis excluding fees. The tax cost basis is different. The average cost is also an input to the total return calculation: Total return = (Market price - Average cost) * Total shares$513.11 = ($3,522.50 - $3,419.88) * 5(calculation may reflect sub-penny rounding) The average cost is used as a reference point for estimating unrealized gains, and isn’t intended for determining your realized gain or loss for tax reporting purposes. If the average cost calculation changes, you’ll see a tooltip explaining the change. You can also read our disclosures at the bottom of the stock, ETF, or options detail pages to see how average cost is defined.
Keep in mind
To get this updated average cost calculation for stock positions, be sure you’re using the latest version of our app.
Tax cost basis is different
The book cost basis isn’t the tax cost basis. Book cost basis doesn’t account for wash sales and may not always include basis resulting from corporate actions and transfers through the Automated Customer Account Transfer Service (ACATs). Therefore this calculation may not match your tax forms, if applicable. The tax cost basis is the original cost of an asset or investment, adjusted for any corporate action activity or a wash sale, for tax purposes. The default method for your Robinhood account is first-in, first-out (FIFO), which is selling the shares you bought first. The shares themselves aren’t specifically tracked, but the cost associated with those shares is expensed first. You can also review your account statements and US tax documents FAQ for more insight into your historical cost basis. Robinhood doesn’t provide tax advice. For specific questions, consult a tax professional.
If you’re using an earlier app version for stocks trading, Robinhood defines Average Cost as the weighted average amount paid for shares (buys). This version of average cost is calculated based on buy orders only. It doesn't change based on sell orders or the price of purchases transferred in through the Automated Customer Account Transfer Service (ACATS).
Example of multiple purchases
When calculating your average cost, you must include all purchases made while holding an asset. This calculation resets when you close out of a position in its entirety (zero shares).Activity date Activity Quantity Price Total amount Average cost 20 Dec. Buy 2 $325 -$650 $325 10 Jan. Buy 2 $330 -$660 $327.50 15 Jan. Buy fractional 0.55 $320 -$176 $326.59 15 Jan. Buy fractional 0.65 $325 -$211.25 $326.39
Example of multiple trades
If you have multiple trades (buys and sells) but still own shares, the average cost calculates the weighted buy prices with the current quantity of the position. When selling, only the quantity changes in the calculation and the average buy prices will remain the same. As soon as a zero position is established, the average cost calculation starts fresh.Activity date Activity Quantity Price Total amount Previous average cost Explanation New average cost Explanation Dec. 8 Buy 2 $700 -$1,400 $700 2 shares at $700 $700 2 shares at $700 Dec. 9 Buy 2 $300 -$600 $500 2 shares at $700 and 2 at $300 $500 2 shares at $700 and 2 at $300 Dec. 12 Sell -2 -$796 $1,592 $500 2 shares at $500 with no change to average cost $300 2 shares at $300 (2 shares at $700 are closed through FIFO) Dec. 14 Buy 2 $700 -$1,400 $600 2 shares at $500 and 2 shares at $700 $500 2 shares at $300 and 2 shares at $700 Dec. 16 Buy 2 $800 -$1,600 $666.67 2 shares at $500, 2 shares at $700 and 2 shares at $800 $600 2 shares at $300, 2 shares at $700, and 2 shares at $800
Disclosures
Robinhood U.K. Ltd (Robinhood UK) is authorised and regulated by the Financial Conduct Authority (FRN: 823590). Robinhood UK onboards UK customers and has the lead customer relationship with UK customers in relation to their use of the Robinhood UK app and website. Robinhood UK introduces UK customers to Robinhood Securities, LLC for order routing, execution, clearing, settlement, arranging custody services and margin lending to eligible UK customers with margin accounts. Robinhood Securities, LLC is regulated in the US by the SEC and FINRA. Robinhood UK and Robinhood Securities, LLC are subsidiaries of Robinhood Markets, Inc.
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