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.

Robinhood defines average cost as the cost per share of your current open position. It is used to calculate the unrealized profit and loss of your current position. 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 detail pages to see how average cost is defined.

Average cost isn’t the same as the tax cost basis. The average cost or credit calculation may not always include the following:

• Trading fees
• Corporate actions

The tax cost basis is the original cost of an asset or investment, adjusted for applicable trading fees or corporate action activity, 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.

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).

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.