Logic behind Average Position Size

[youdee101]

Hello there,


Example:

So I bought 5 contracts at 100$.

Close is now at 150$ and broke through say a resistance at 120$. I now want to average my position price to 120$.

How many contracts to add to my position to attain an average position price of 120$ ?

[NinjaTrader_Jim]

Hello youdee101,

Thanks for your question.

This is less of a logical question but a mathematical one. The average position price is the average price for each contract entered. If you bought 5 contracts at 100, the average entry price is 100 because (100+100+100+100+100)/5 = 100.

If you want to add contracts at the current market price to adjust average entry price to 120, you can use algebra.

For example, you can set up the following equation and solve for x to get the number of contracts you need to buy to adjust the average entry price.

(500 + 150x)/(5 + x) = 120.

We look forward to assisting.

[youdee101]

Thank you for the quick response!

[youdee101]

Still more of a math than a logical problem.
How would I refactor this equation, so I could use it as code to receive sharesToBuy as position size for the new order.
First resistance of the pivot indicator is the desired new avg price in this example.

x = sharesToBuy

(Position.Quantity * Position.AveragePrice + Close[0]*x) / Position.Quantity + x ) = Pivots1.R1[0]

I am trying to turn it to someting like: sharesToBuy = Variable1 * Variable2 / etc. + e.g


if (CrossAbove(Close, Pivots1.R1, 1))
{
EnterLong(Convert.ToInt32(sharesToBuy), "");
}

[NinjaTrader_Jim]

Hello youdee101,

Helping out with your algebra is not exactly within our scope of services, but in order to be helpful, please consider the following:

(500 + 150x)/(5 + x) = 120
500 + 150x = 120 * (5 + x)
500 + 150x = 600 + 120x
500 + 150x - 120x = 600
30x = 100
x = 100/30
x = 3.3

You can use this model and replace different coefficients and values with your own variables. If you are looking for services to have the code written for you, you can consider hiring a NinjaScript Consultant. If that interests you, please let us know and we can have a colleague reach out with more information on those services.

We look forward to assisting.