Why is there profit in the positions tab on CubePlus despite a higher buy average than the LTP?

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Understanding Buy Average and Profit/Loss Calculation on CubePlus

Q: When the buy average is higher than the Last Traded Price (LTP), why do I still see a profit in the positions tab on CubePlus?

A: CubePlus calculates the buy average in a way that may result in a profit even when the buy average is higher than the Last Traded Price (LTP). This happens when multiple trades are executed in the same stock within the trading day, leading to the opening of a new position for that instrument.

Example Scenario:

Let’s say you initially buy 50 shares of a stock at ₹280 and later sell them at ₹287, making a profit of ₹350. Subsequently, you buy 70 more shares of the same stock at ₹283.

The buy average displayed in the positions tab is calculated by considering the total quantity traded:

Buy average

= ((50 * ₹280) + (70 * ₹283)) / (50 + 70) = ₹281.60 (rounded to two decimal places).

If the stock price later drops to ₹280, the displayed profit or loss (P&L) will show a profit of ₹140, even though the buy average of ₹281.60 is higher than the price.

Now, if the stock price goes back down to ₹280, the displayed profit or loss (P&L) will show a profit of ₹140, even though the buy average of ₹281.75 is higher than the price.

This calculation method considers all the trades made in that particular stock for the trading day, offering an overview of the P&L for those trades in the positions tab on CubePlus.