What It Means
A weighted average is an average that gives more importance to some values than others, based on a chosen weight, rather than treating every value equally the way a simple average does.
Example
Say a trader buys 100 shares at ₹200 and later buys another 300 shares at ₹220. A simple average of the two prices would be ₹210, but that ignores that far more shares were bought at ₹220. The weighted average buy price — what actually matters for calculating profit or loss — is (100×₹200 + 300×₹220) ÷ 400 = ₹215. That ₹215 figure, not the simple ₹210 average, is what most brokers show as your holding's average cost.