AIM RE-bal

[karw]

Hi Matt, weighted average is the average price on the LIFO stack.

WAP= (P1*Q1+P2*Q2+.....Pn*Qn)/(Q1+Q2+....Qn)

where P1 is the price of the first stack element, Q1 is the quantity of stock of the first stack element.

The formulas I corrected to equalize the impact of 4/9 vs 9/4 so that a percentage downwards move and the corresponding percentage upward move would result in the same amount. In this way you see that the system never asks for a sell greater than the quantity in stock. On the buy side it means you NEVER will be out of your cash.

The situation is fully symmetric and this is caused by the sell factor, which is a quadratic of a price ratio.

It will be interesting to see how a formula like this will perform in real life. No worries about deep divers!

Kind Regards, K