Average is a term that may appear in the market from time to time. This refers to the average price paid for that particular stock if you bought the stock of that particular company.
To calculate the average price paid for a particular stock, you need to add the total amount paid for the stock and then divide by the number of stocks you bought in that company.
The answer is the average amount you have paid per share.
Try this math problem:
There are five numbers 10, 20, 30, 40, 50
What is the average?
Add five numbers together: 10 + 20 + 30 + 40 + 50 = 150
Divide the total of five numbers (150) by 5
150 divided by 5 = 30 (answer)
You can do this easily with a calculator.
Nowadays, there are so many stock trading platforms available that ordinary men and women have never directly invested in the stock market so easily.
So how does the average work?
If you buy stocks regularly, you will pay a different price for each stock because the price of the stock will go up and down. Imagine if you bought something at the supermarket at full price last week, and then bought the same item at a special price this week. The average price you pay for the item will be between the higher price and the lower price.
The stock market is like that. By buying specific stocks on a regular basis, you will try to repurchase some of them when the price drops. This is the advantage of regular preservation.
In fact, I think there is a situation where more stocks are bought when the price is lower. The average price paid per share is determined by the calculation described above.
The averaging strategy can also be used for cryptocurrency investment.
Bitcoin is more volatile than the stock market, so savvy investors are willing to bargain and can invest when prices fall.
There are too many stock trading platforms available, and everyone can participate in market transactions. I have joined two of them in New Zealand. Stock trading platforms are available in most countries/regions. Registering for them is easy; you need some form of identification. Just follow the instructions.
to sum up
Entering the market requires a positive attitude and a cool head. If there are these, you can profit from a falling market. Averaging is a way to take advantage of a falling market.