From the book Investing and Trading: Secrets to Success
The concept of average price and its use in investment decisions.
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Watch on YouTube ↗Our YouTube channel is originally in Spanish. Some videos may not have an English audio track.
CHAPTER SUMMARY
The idea in one minute
The historical average price and your average purchase price answer different questions. The first provides context; the second reflects what you paid for your units. Keeping them separate avoids confusing a chart reference with your position’s cost.
What to remember
- With purchases and no other changes, average cost is total cost divided by units.
- Sales, transfers, rewards, or fees require adjustments to the data.
- Being below a historical average does not prove an asset is cheap.
Put it into practice
Gather the cost and quantity of the units you hold. Calculate their average before deciding whether another purchase fits your plan.
Want to go deeper?
Find the full discussion and examples in the book Investing and Trading: Secrets to Success.
Browse all chapters
- INIntroduction
- TOCContents
- 01The evolution of trading
- 02Trading and investing
- 03Different markets
- 04Fast and slow leverage
- 05Spot vs. derivatives
- 06D.C.A. strategy
- 07Diversification
- 08Base and quote currencies
- 09How money works
- 10Financial market cycles, BTC halving, and strategy
- 11Reading Japanese candlesticks
- 12Support and resistance
- 13There is no exact science in this field
- 14What moves markets?
- 15How to identify trends
- 16Ranges
- 17Japanese candlestick patterns
- 18Moving averages
- 19The most popular technical indicators
- 20Filling the GAP
- 21Trading styles
- 22Binary options: the biggest garbage ever to exist in the markets
- 23Fundamental analysis and fundamentals
- 24Financial bubbles
- 25Before learning to win, learn to lose
- 26An asset’s average price
- 27Extreme events
- 28Price action: strategies
- 29Liquidity and market makers
- 30The DeFi world: benefits and risks
- 31Scams and risks to avoid
- 32Risk vs. volatility
- 33Arbitrage
- 34Grid trading in Spot and Futures
- 35The shortest path is the longest path
- 36The circle of success
- APAppendix
- ENDFarewell
Video from the original 2024 edition and a summary prepared for this website. References and conditions in the video may have changed.
Educational content. Trading in financial markets involves a risk of loss; past results do not guarantee future results.