Average cost
Robinhood defines Average Cost as the weighted average amount paid for shares (buys). It's calculated based on buy orders only.
It's 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 with all amounts in US Dollars)
Average cost is used as a reference point for estimating unrealized gains, and not intended for tax purposes.
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).
| Activity date | Activity | Quantity | Price | Total amount | Average cost |
| 20 Dec. | Buy | 2 | $325 | -$650 | $325 |
| 10 Jan. | Buy | 2 | $330 | -$660 | $327.50 |
| 15 Jan. | Buy fractional | 0.55 | $320 | -$176 | $326.59 |
| 15 Jan. | Buy fractional | 0.65 | $325 | -$211.25 | $326.39 |
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 $0 (zero) position is established, the average cost calculation starts fresh.
| Activity date | Activity | Quantity | Price | Total amount | Average cost | Explanation |
| 8 Dec. | Buy | 2 | $700 | -$1,400 | $700 | 2 shares at $700 |
| 9 Dec. | Buy | 2 | $300 | -$600 | $500 | 2 shares at $700 and 2 at $300 |
| 12 Dec. | Sell | -2 | -$796 | $1,592 | $500 | 2 shares at $500, the average cost doesn't change |
| 14 Dec. | Buy | 2 | $700 | -$1,400 | $600 | 2 shares at $500 and 2 shares at $700 |
| 16 Dec. | Buy | 2 | $800 | -$1,600 | $666.67 | 2 shares at $500, 2 shares at $700 and 2 shares at $800 |
Disclosures
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