What happens in intraday trading?

To understand Intraday trading better, here's an example:

Consider this,

On 1st July:

Orders Placed - 3

First Order: Price= ₹ 100 Quantity = 50, Buy Order Value = ₹ 5,000

Second Order: Price = ₹ 104 Quantity = 50, Buy Order Value = ₹ 5,200

Third Order: price = ₹ 108 Quantity = 25, Sell Order Value= ₹ 2,700

Here's what the numbers mean:

For first and second Order

Total quantity = 100

Total value: ₹ 10,200

Divide total value by total quantity: ₹ 10,200 ÷ 50 = ₹ 204

₹ 204 is the average price.

Let us see what happens when you add a sell order to this: 

Sell order 25 (out of 100)

Price: ₹ 108

Sell Order Value: ₹ 2,700

Now the FIFO method will be applied here.

The method will check the first trade (on the buy-side). In this case, it is 50, and 25 will be deducted from 50. The balance left is shown below.

After applying the FIFO method,

Balance: 50 - 25 = 25

(Note: In case the sell quantity was more than 50 then it would have moved to the next trade to deduct the remaining quantity.)

First Order: Price= ₹ 100 Quantity = 25, Buy Order Value = ₹ 2,500

Second Order: Price = ₹ 104 Quantity = 50, Buy Order Value = ₹ 5,200

Total order value= ₹ 2,500+₹ 5,200= ₹ 7,700

Total Quantity= 50+25 = 75.

Average price = Total order value ÷ Total Quantity

Average price: ₹ 7,700 ÷ 75 = ₹ 102.67

The Average price calculation remains the same even if you are carrying a sell position instead of a buy position.