Average entry price

Where a position was opened in more than one piece, each piece carries its own price and its own size, and the figure a platform shows against the position is the mean of those prices weighted by size. Two tranches of equal size average to the midpoint between them. A second tranche larger than the first pulls the average further toward the second price than toward the first. The arithmetic is the same whether the pieces arrived because an instruction was partially filled or because a further instruction was sent later.

What the figure reports is where the position sits relative to the market, and nothing else. It is the price at which the position as a whole shows neither gain nor loss before costs, so it fixes the point the market has to reach for the position to be flat. It says nothing about whether the size is appropriate, because size does not appear in it: a position of any size can carry the same average entry, and the money at stake per point of movement is set by the size rather than by the average.

That separation is the reason the figure is easy to misuse. Adding to a position that has moved against it lowers the average entry of a long, which reads as an improvement, while raising the total exposure, which shortens the distance the account can absorb before the margin close out level is reached and increases the loss produced by any further adverse movement. Both facts are produced by one action, they point in opposite directions, and the average entry shows only the first of them.