How to calculate profits in partial covering of positions?

Discussion in 'Risk Management' started by ronin266, Apr 18, 2012.

  1. Hi,

    I would like to know what is the rule to calculate profits in partial covering of positions?.

    Lets say:

    I bought 100 shares @ 10.00
    I add another 100 @ 10.10 (average price would be 10.05 200 shares)

    Price goes in my direction

    I decide to cover half (100) @ 10.20
    and the other half @ 10.30

    What part of my position would close at each price?

    I mean, the first lot at 10.2 and second at 10.3 (20 + 20 profit) , or the first the added 100, and only then my first lot (10 + 30 profit)? or it would be calculated from the avg price?

    thanks.