📈 Stock Average Down Calculator
Calculate the average purchase price when averaging down on stocks.
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What is Averaging Down?
A strategy of buying additional shares when price drops to lower the average purchase price.
Average Price Formula
Caution
Averaging down lowers the average price but losses may increase if the price keeps falling.
Worked examples
Buying 100 shares at $150 and another 100 at $100 costs $25,000 for 200 shares, so the average price falls to $125.
A third purchase of 100 shares at $80 lowers the average further to $110 on 300 shares, even though the position is now worth only about $24,000 at that price.
What the average assumes
The average is a quantity-weighted mean, so a larger purchase moves it more than a small one. Averaging down reduces the break-even price but increases the amount at risk: the position grows exactly when the thesis is under pressure. Fees, taxes and dividends are ignored, and a price of zero would make the change rate meaningless.
Frequently asked questions
- Does averaging down reduce risk?
- It lowers the break-even price, not the risk. The exposure grows because you own more shares; if the price keeps falling, the loss in currency terms is larger than before.
- How is the average price calculated?
- Sum each price times its quantity, then divide by the total number of shares: (150 × 100 + 100 × 100) ÷ 200 = 125.
- When is averaging down sensible?
- Only when the reason you bought is still valid and the position size stays within your plan. Averaging into a broken thesis is how small losses become large ones.