How to use it
- Under Current position, enter the average price and share count from your brokerage app.
- Under Additional buys, enter the price and number of shares you plan to buy. Planning to scale in? Add up to 10 buys.
- You get the new average price, plus a before-and-after table of return, unrealized P/L and the rise needed to break even. Leave the current price blank to use the first buy price.
The Target average tab works backwards: enter a buy price and the average you want, and it tells you how many shares to buy and how much money that takes.
The formula
New average = (old average × old shares + buy price × new shares) ÷ total shares
Say you hold 10 shares at $150 and buy 10 more at $120. The new average is (1,500 + 1,200) ÷ 20 = $135. Your average falls 10%, and the rise needed to get back to even drops from 25% to 12.5%.
Shares needed for a target = old shares × (old average − target) ÷ (target − buy price), rounded up to a whole share. The target has to sit between your current average and the buy price: buying at $120 can never pull your average below $120.
Before you average down
| Check | Why it matters |
|---|---|
| Why the price fell | A market-wide dip is different from a problem at the company |
| How much more money goes in | A big cut to your average means a bigger bet on a single stock |
| A plan for several buys | Spreading buys across price levels keeps cash in reserve if it keeps falling |
Averaging up, buying more as the price rises, uses the same math and raises your average. Fees and taxes vary by broker and market and are left out, so check your broker for exact figures. For a quick percentage change, use the Percent Calculator.