How it works
The distinction comes from quantity weights. Each price applies to the units actually bought at that price. If instead an investor buys the same number of units each time, the arithmetic average is appropriate before fees. Fixed money and fixed quantity are different purchase rules, even when their dates coincide.
Record dates, cash amounts, execution prices and quantities. Where fractional units are unavailable, unused cash must remain separate. Commissions increase acquisition cost and conversion fees may add another expense. A historical closing price is a reference for an exercise, not proof that an order could have executed at exactly that price.
Worked example
Assume fractional units, no fees and three purchases of 120 units of currency at prices of 12, 8 and 10. They acquire 10, 15 and 12 units: 37 in total for 360. Average cost is 360 / 37 = 9.73, versus an arithmetic price average of 10. If the final market price is 9, the position is worth 333 and has a 27-unit unrealized loss.
Interpretation and limits
A lower average cost than the average quoted price does not establish profitability. A persistent decline can produce continuing losses. Spreading an existing lump sum over time also differs from investing new income as it arrives; idle cash, rising markets and transaction costs affect the comparison. No purchase schedule eliminates market risk.
Chart practice
Choose three available closed monthly bars and reproduce the quantity calculation in a separate worksheet. Keep prices consistently adjusted and exclude later information from earlier decisions. Student Wyckoff Pro provides chart analysis; this exercise does not imply automated purchases or portfolio bookkeeping.
Primary sources
Sources explain the mechanics and limitations; the editorial examples use invented numbers rather than market quotations.
Your next practical step
Continue with analysis of available closed daily, weekly and monthly bars.
Open the first-chart instructions ↗