Why do you calculate Buy price using FIFO Logic?
Profit & Loss in Shares are Taxable. So to calculate
right profit & Loss which can be bifurcated between Short Term Capital gain
and Long Term Capital gain we need to apply FIFO (First in First Out) Logic
Avg
Price formula: { (100*159.2) + (200*156) }/300
Example:
Avg Price: 781
Note: Entries highlighted in the same color are knocked off against each other.
FIFO is
done on first in first out basis. For example, in this case, shares sold on 9
April 2018 would be knocked off against shares sold on 15 Jan 2018. Average
price would be calculated on the basis of quantity that which is left after knock
off i.e. holdings. In this case, average price would be 781.
Intraday Knock Off Concept
Note: Entries highlighted in the same color are knocked off against each other.
Avg Price Value: 157.07
The
shares which are bought and sold on same day are considered as intraday
transactions and would get knocked off against each other. For example, in
this case, 18 June 2018 sell entry would be knocked off against 18 June 2018
buy entry. Once intraday knock off is done, FIFO logic gets applied.
Note: Intraday trading is not allowed for stocks which fall under
trade-to-trade segment.
Related Articles
How is Average Buy Price Calculated?
Average Buy price is the weighted average of all the Delivery Purchases carried out in a particular stock. It only applies to Quantity which is open in your Portfolio Share Transfers from Other Demat Account to 5Paisa Demat account will be ...How to apply for Buy Back of shares?
You can apply for the Buyback through the 5paisa website by following the below-mentioned steps. Step 1: Log in to www.5paisa.com Step 2: Click on Profile >> Financial Product >> Buyback. Step 3: After clicking on Apply for Buy Back, you will land in ...How do I place Buy VTT order?
VTT Buy Order: This type of order is utilized to set up triggers for buying stocks intended for delivery. Once the trigger price is reached, a buy order is automatically executed at the specified limit price on the exchange. This order is applicable ...How do I place Buy VTT order with Stop loss and target?
Buy VTT with Stop-loss and Target: Allowed in equity and FNO segment (Delivery Trade) Consider the example in the below image below: In this example, If the trigger price of 2700 is hit on the exchange, a limit buy order at 2700 is placed. This order ...Where can I see the strategy reference price?
You can see the strategy reference price by clicking on the history on the Strategy P&L page.