Jerry, if you sold a dollar for eighty cents? That is not what AIM does. AIM always sells for a profit. What you do when you calculate average cost, will in effect ignore a part of the AIM action. It will make you sell at a bigger profit, and it will make you miss opportunities to sell. Your choice, of course.
Why does AIM never sell at a loss, despite your calculation? AIM is a Buy-and-Hold scheme, with a cash reserve as risk protector and 'play money'. When the price goes down, money moves from the cash to the equity side. When the price rises again, you hurry to replenish the cash. When the price rises further, you'll want a bigger cushion. And when the price drops after that, you add again to your position. Never ever do you consult the average share price (unless you must, for some obscure reason of your own). You only say: the prices are rising again after a drop, can I sell those shares I bought recently in the drop for a profit? Or: the prices drop again after a rise, can I buy back at a discount the shares that I sold off for a nice price on the way up? In fact, AIM will have you buy back relatively more shares than you sold, and sell less shares than you bought, but that is because AIM likes to accumulate shares.
You want to make a profit on your last transaction. If you can do that, don't let the average share price stop you.
Regards,
Karel
