The cost of the position

Moomoo Financial Singapore Pte. Ltd. provides two methods to calculate the cost basis of securities.

1. Diluted Cost

Diluted Cost refers to the break-even price (excluding commissions and fees) of a stock while you hold it. It considers the profit and loss (P/L) on every trade, both buy and sell, but is not affected by rights issue, etc.
If you hold a long position in a stock and sell it at a price equal to the Diluted Cost, you reach the break-even point and have no net P/L. P/Ls on sell trades will raise or lower Diluted Cost and could even make it negative.

Formulas:
- For long positions: Diluted Cost = (Total Amount of Buy Trades within the Holding Period - Total cash dividend within the Holding Period– Total Amount of Sell Trades within the Holding Period) / Quantity
- For short positions: Diluted Cost = (Total Amount of Sell Trades within the Holding Period – Total Amount of Buy Trades within the Holding Period + Total cash dividend within the Holding Period) / Quantity
Holding periods: ForUniversal accounts, the holding period is calculated on a daily basis, starting from day T when there is no position at the beginning of the day and a position is held by the end of the day.
Costs are calculated seperately for long positions and short positions.

2. Average Cost

Formula

Average cost = (average cost before buying × quantity + the price of this purchase × quantity) ÷ quantity after the purchase

Implication

It is the average cost of the current position of a stock (excluding commissions and fees). Only purchases are considered. The gain or loss corresponding to the sale of a stock does not dilute the cost price, but is converted to realized gain or loss.

Eg.1. Opening A Position

If the customer does not hold Alibaba (BABA) before TDay, and buy 200 shares at $200/share on T Day, then

Diluted Cost = (Total amount of Buy executions within the holding period - Total amount of Sell executions within the holding period)÷ Quantity

=（200×200-0）÷200

= 200

Average Cost = (average cost before purchase × quantity before purchase + purchase price × purchasing quantity) ÷ the quantity held after purchase

=（0+200×200）÷ 200

= 200

If the stock price rises to $205, compare the positions under the two methods.