Arihant plus uses the First In, First out (FIFO) method for calculating the average price for overnight (Delivery) positions. Let’s understand this calculation by taking an example of Nifty Futures.

1st August

Total Order placed: - 2

1st Order:

Quantity: 225| Price: 10,000

Quantity: 75 | Price: 10,200

To calculate the average price, first calculate the value (Quantity x Price). Hence:

1st Trade: - Rs. 22, 50,000

2nd Trade: - Rs. 7, 65,000

Total Quantity: 300

Total Value: 30, 15,000

Divide total value by total quantity:

30, 15,000 ÷ 300 = 10,050

This is the Average price

On 5th August

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

Sell order placed on 5th August: 150 quantity (out of 300)

Price: - Rs.9, 050

Now the FIFO method will be applied here. The method will check the first trade (on the buy side).

In this case, its 220, so 150 will be deducted from 220. The balance left is shown below:-

After applying FIFO method,

Balance: - 225 - 75 = 150

(Note: In case the sell quantity was more than 225, then it would have moved to the next trade to deduct the remaining quantity)

Average price = Total Price ÷ Total Quantity

Average price: Rs. 15, 15,000.00 ÷ 150 = Rs. 10,100.00

This is how the FIFO method is used for calculating the average price. Calculation remains the same even if you are carrying it on the short sold position instead of the buy position.