How to use the stock average calculator
The page has two tools. Average price combines purchases you have already made. Average down / up looks forward: what one more purchase would do to your average, or how many shares you would need to reach a particular average.
Average price
- Enter each purchase as a row: the shares and the price per share, from your trade confirmations or your broker’s tax-lot view. Use Add purchase for more rows.
- Add the fee for each purchase if you paid one, in dollars for the whole trade. Leave it empty if your broker charges no commission.
- Enter the current share price if you want to see where the position stands today. It is optional.
Average down / up
- Enter the shares you own and your current average cost, from the first tool or your broker’s position screen.
- Enter the price of the new purchase. A price below your average averages down; a price above it averages up.
- Choose what you want to know: the effect of buying a set number of shares, or the number of shares needed to reach a target average.
The formula
The average cost is a weighted average: each price counts in proportion to the shares bought at it.
Average cost incl. fees = (Σ Si × Pi + Σ Fees) ÷ Σ SiSi is the number of shares in purchase i and Pi the price paid per share. Fees are the commissions charged on each purchase, in dollars.
To reach a target average T by buying at price P, when you hold S0 shares at an average A0, solve the same formula for the number of new shares:
A worked example
You bought a stock three times as it fell: 100 shares at $48, then 60 at $41.50, then 80 at $36.25, paying $5 each time.
You own 240 shares and have put in $10,205.00. The average price before fees is $42.46; spreading the $15.00 of commissions over the shares adds $0.0625 each, for an average cost of $42.52.
With the stock now at $44, the position is worth $10,560.00, an unrealized result of $355.00 (+3.48%). The first purchase is still under water; the cheaper later buys more than make up for it.
Had the stock stayed at $38 instead, the same position would show -$1,085.00, and it would need to rise 11.90% to get back to even.
Commissions matter less than they used to. With zero-fee trades the average would be $42.46, the same as the average price before fees.
Averaging down: what each purchase buys you
The second tool starts from 200 shares owned at an average of $52.40, with the stock now at $38.75. At that price, the stock must rise 35.23% just to get back to even. Here is what different purchase sizes do:
| Shares bought at $38.75 | Cash needed | New average | Rise needed to break even |
|---|---|---|---|
| None | $0 | $52.40 | 35.23% |
| 50 | $1,937.50 | $49.67 | 28.18% |
| 100 | $3,875.00 | $47.85 | 23.48% |
| 200 | $7,750.00 | $45.58 | 17.61% |
| 400 | $15,500.00 | $43.30 | 11.74% |
Each extra share moves the average less than the one before. Doubling the purchase from 200 to 400 shares doubles the cash to $15,500.00, yet lowers the average only from $45.58 to $43.30. The chart under the calculator shows the same thing as a curve that flattens towards the purchase price.
Working backwards gives the same lesson. Reaching an average of $45 takes 237 shares ($9,183.75); reaching $42 takes 640 shares ($24,800.00). The closer the target sits to the purchase price, the faster the required number of shares grows.
Averaging up
The same arithmetic works when the price has risen. If you own 100 shares at $30 and buy 50 shares more at $45, the average rises to $35.00. The cost of a bigger stake in a stock that is working is a thinner cushion: a pullback that would have left the original shares in profit can now put the whole position at a loss.
When averaging down makes sense, and when it does not
Averaging down is arithmetic, not a strategy. It makes the break-even price easier to reach, but only by putting more money into the same company. The useful question is not “how do I lower my average?” but “would I buy this stock today, at this price, if I did not already own it?”
- It can make sense when the fall does not change the value of the business, the position stays within the limit you set for one stock, and you planned to buy in stages anyway.
- It is risky when the fall reflects real bad news, when one stock becomes a large part of your savings, or when the main motive is to avoid admitting a loss. A warning appears when one purchase costs more than the shares you already hold.
Your average cost also says nothing about what the stock is worth: the market does not know what you paid.
What this calculator does not include
- Sales. The tool assumes you have only bought. If you sold part of the position, the average cost of the shares you kept depends on the tax method (FIFO, specific lots or average cost), which our cost basis calculator handles.
- Dividends and reinvestment. Reinvested dividends are new purchases; add them as rows if you want them in the average.
- Stock splits. Purchases before a split must be adjusted to post-split shares and prices first, otherwise the average will be wrong. The stock split calculator does that conversion.
- Taxes and the wash sale rule. In the US, buying the same stock within 30 days before or after selling it at a loss disallows that loss for now and adds it to the cost basis of the new shares.