Average Buy Price Issue
For those of us who noticed something different happening with the average buy price after the twice-extended maintenance shutdown I have, after several attempts, received a reply from Customer Services.
The issue, which as far as I could recall, had not been so prior to the maintenance was that if you sold a portion of your existing shares in a player the average of the remainder jumped up and left you, for example, with a player who had been in the green before your sale now in the red.
The reply I have received is as below. I would appreciate the mathematical and practically-minded intelligentsia's view on the matter.;
'Thank you for your patience. Please understand that this average will move depending on the futures that are currently in your portfolio.
As the platform will always sell the oldest futures first the remaining futures that may have been purchased at different times will be re averaged to reflect the total investment made in a player.'
Make any sense? Doesn't this make the existence of the average immaterial? Or am I once again proving myself to be a mathematical black hole?
hmmm...i guess it does make sense. it seems like its wrong but i guess it is fair. however if this is the case surely you should see a higher profit margin than expected in those that you sold (as theoretically they will be below your average price)
@NewUser297399 well yes indeed that’s what I thought and where I began to stretch myself beyond my mathematical boundaries! 😁
It follows then that the profit column of our PFs is not accurate , because as you point out, if we sell shares we would get more or less than this figure, depending on the specific buy price of actual shares sold, not the average.
The annoying thing is that it just makes another thing that we have to track ourselves , will need to keep a record of buy prices along with how long have held players for (for 30 day rule) etc. Would hope as the platform evolves these things could be recorded and accessed more easily automatically.
I sold 400 of a player recently and the average price rose by 14p, the profit on that player altered dramatically because I still hold 800, obviously this alters the total profit on portfolio too.
I've tried to ignore it because CS didn't even reply to my Email regarding this.
I guess the only true way to see your profit is with how much you've deposited total compared to portfolio value minus 2%. - 5%.
It does seem weird they just decided to change this without any announcement or anything. It wasn’t like this before as far as I’m aware.
I shall collect all of the responses on here and copy them into my next email.
So in terms of simple maths, say you buy 10 shares at £10, they rise to £20 and you buy 10 more. It should say 20 shares, Ave price is £15, profit is £100.
Say you then sell 10 shares, it will sell the old shares first, so you'll have 10 shares. In theory, is your average price per share still £15, because on average you bought at £15, or is it now £20 because the average price of those last 10 shares is £20?
Thinking aloud, I suppose it should read £20 average because you've sold 10 shares and taken the profit in those. You port should therefore read 10 shares, no uplift on those so they are £20? Is that right?
@GregF yes I think that is right
Yes, 10 shares ave £20 and no profit
Makes perfect mathematical sense
so are we saying FI work it out correctly and you do get the higher profit from the older shares which were purchased?
A further response to my questioning the validity of the original response as follows;
Thank you for your reply. Please be aware that this is a new feature on the platform since the maintenance. Please be advised that the selling of the oldest shares first means that you will have the newest shares in your portfolio and thus the average will be reflecting this change.
100 x £1.00
100 x £2.00
= an average of £1.50
remove 50 shares regardless of the price movement and this becomes:
50 x £1.00
100 x £2.00
Please note: That the cost price of players during the share split was rounded down where necessary and the the value of the player was rounded up where necessary, thus creating a larger profit margin for traders. Hence the £1.60 and not £1.66.'
I got the same response, i replied stating i hadnt actually sold any of the players affected, so that doesnt explain it...they haven't replied.
And i had the problem way before the SS so the new system thing doesnt explain it either.
Simply prices werent being tracked properly.
Cant remember my exact example but something like (figures made up to represent easier):
I bought 10 x rudiger at 4£
His price dropped a quid
So i topped up 10 x £2
The average cost should have dropped from £4 to £3, but it didnt, they charged me the new shares at £4- the average cost remained.
I bored of trying to put this across to CS, and ive had plenty of other technical issues all resulting in losses to my port...CS are too slow and lots of them dont understand the platform themselves...i'm tempted to give up caring, but i shouldnt.
Luckily I am off work for 2 weeks soon, so i will have a bit of time and energy to follow up all the issues.
Hoping my issue where they multiplied my buying by 3 is sorted today...
thanks for the post... my biggest issue/query still remains...
ive never sold a player who ive 'topped up on' so i dont know.
but using this example. for the 50 shares that were cashed out is the profit (cash out) based on the £1.00 figure or the £1.50. Or is it irrelevant?
lets say the player new value is £3 and using example above you own 200 shares (100 x £1, 100 x £2.00 = 200 x £1.50) your value would show £600 (£300 profit) for a £300 investment.
cash out 50 shares - profit should be 50 x £2.00 (difference between original share price and new share price) = £100 profit
now average price is £1.66. so your value would show £450 (£200 profit) for a £250 investment.
(same as 50 x £2.00 (difference) + 100 x £1.00 = £200 profit)
cash out another 50 shares - profit should be 50 x £2.00 (difference between original share price and new share price) = £100 profit
average should now be the same as your last investment (100 shares left @ £2.00) cash these out....100 x £1.00 (difference) = £100.
so... doing it this way the profit is the same as if you cashed out all of your shares at the average price of £1.50... however do they do it this way? (need someone whose experienced it to tell me)
the alternative way which should be wrong.
...average 200 shares @ £1.50
cash out 50 @ £1.50 (difference of new player price and average investment price) = £75
cash out 50 @ £1.34 (difference of new player price and new average investment price) = £67
cash out 100 @ £1.00 (difference of new player price and new average investment price) = £100
£300 profit vs £242 profit = £58 difference
obviously this is one example but which way do they do it?? need someone to tell me.
Also how does this reflect on the profit displayed in the portfolio?
what was the verdict on this?
@NewUser297399 still waiting for their latest reply. I think the maths has given them a headache! 😂😂
@Le-Blanc I think the maths has given me a headache too and it shouldn't.
It is pretty simple.
If you sell, and the cheaper shares get sold first, average price should go up.
If you buy and the new shares are more expensive than the ones you have, average price should go up.
This is definitely a technical issue. Otherwise the profit and loss section of the portfolio becomes very inaccurate and you have to track your actual profits or losses. Having checked my portfolio no money is actually lost when I sell and the average price jumps so its not a huge issue but it is extremely annoying.
this isnt really my question... obviously the average price goes up etc. my question, is there a difference in 'profit gained' between selling shares in a player all in one lump vs. selling in portions?
(assuming this player is someone who has been topped up at various prices)
No, the profit will be the same, if the sell price is the same when you sell in portions.
The profit shown on later shares will look less if you sell the cheaper ones first. But overall, the profit remains the same.