In the past I've only ever "doubled" my position size when adding lots to an existing position.
So it has always been easy to determine what my new "basis" price would be, as it would be HALFWAY between the first entry price and the second entry price.
However, I am now planning on adding to my positions in a way such that the new position size would be 3x or even 4x the size of the original position, instead of only 2x.
So, is the following way of calculating what the new basis price would be correct:
First example (increasing position size from 100% to 300%)
======================
10000 units shorted at 1.0000
Basis price currently 1.0000
An additional 20000 units of same pair shorted when the price has reached 0.9000
Is the NEW basis price for the 30000 units now 0.9333?
======================
Second example (increasing position size from 100% to 400%)
======================
10000 units shorted at 1.0000
Basis price currently 1.0000
An additional 30000 units of same pair shorted when the price has reached 0.9000
Is the NEW basis price for the 40000 units now 0.9250?
======================
Just wondering if my math is correct here ...
So it has always been easy to determine what my new "basis" price would be, as it would be HALFWAY between the first entry price and the second entry price.
However, I am now planning on adding to my positions in a way such that the new position size would be 3x or even 4x the size of the original position, instead of only 2x.
So, is the following way of calculating what the new basis price would be correct:
First example (increasing position size from 100% to 300%)
======================
10000 units shorted at 1.0000
Basis price currently 1.0000
An additional 20000 units of same pair shorted when the price has reached 0.9000
Is the NEW basis price for the 30000 units now 0.9333?
======================
Second example (increasing position size from 100% to 400%)
======================
10000 units shorted at 1.0000
Basis price currently 1.0000
An additional 30000 units of same pair shorted when the price has reached 0.9000
Is the NEW basis price for the 40000 units now 0.9250?
======================
Just wondering if my math is correct here ...