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scaling in and out

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Jill Miller asked 4 years ago
HI Pat, With all the buying in today it reminded me to ask you a question about how you handle the cost basis and accounting when scaling in and out of positions. If I buy 10 shares of xyz at $100 my value is 1000 and cost basis on stock is $100 Next I buy 5 more shares at 110 so my value is no up to 1550.  Would my cost basis be $103.33 or do you keep these transactions separate. Conversely when we sell - say we sell 5 shares - do you take the 5 off the original buy at $100? Maybe I'm overthinking and overcomplicating this but just wondered how you would handle it.  Just as an aside- if you could put some documents(adobe) on the website that outlined these basic principles it would be really helpful at least to me.  It seems like when I look around the website to see if this might have already been asked all I see are videos.  Maybe I'm missing a section though? THanks in advance!!
3 Answers
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Avatar photoOwen Staff answered 4 years ago

Hi Jill,
Video from Pat:
https://youtu.be/BQ8W03G-TNU

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Avatar photoOwen Staff answered 4 years ago

We've been working on a book that does contain some basic principles of the system we follow along with our trading plan.
Once I have that book laid out, I'll take some of that information and do with it as you suggest to create a section on
the website where members can download it in printable format.

Jill Miller replied 4 years ago

sounds great! You two have a lot going on!!

Avatar photoOwen Staff replied 4 years ago

Something has to keep us out of trouble. 😉

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Avatar photoOwen Staff answered 4 years ago

Regarding cost basis. To calculate, as example, the current cost basis we post on the Current Positions page... we simply take the current price from the trading platform.
So if we buy 100 shares and then buy another 30 shares, the cost basic increases. We just use the current cost; whatever the platform shows.
Maybe that sounds simplistic, but accounting gives me hives. I'm even worse than Pat when it comes to accounting; I have an accountant several hours away
(it keeps me more sane). ;-)

Jill Miller replied 4 years ago

Thanks Owen – I completely forgot that you post the current holdings on the website!