DDanfio

Average Down Calculator

Averaging down means buying more of something that has fallen. The arithmetic is simple: a new purchase at a price below your existing average pulls that average down, so the position needs a smaller recovery to break even than it did before.

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Total paid for the position divided by the shares in it.

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$
$

Commission or platform fee in money, taken out of the amount added.

Fee when you eventually sell, used for the break-even price.

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The average you would like to reach by buying at the current price.

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Used for the position size section below.

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$

Optional ceiling on how much of the account one position may use.

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Results update as you type. Nothing leaves your device.

Average cost after the new purchase

$133.33

150 shares and $20,000 of cost basis at a price of $100.00

Change in average cost
-11.11%
Break-even price
$133.33
Position worth now
$15,000.00
Shares added
50

What the position is made of

  • The original position$15,000
  • Added at the lower price$5,000

Averaging down lowers the cost basis by adding money at a lower price. It also increases the amount exposed to the same fall, which is the part the average cost hides.

What different amounts do to the average

Amount addedShares boughtNew average costChangeNew break-even
$1,00010$145.45-3.03%$145.45
$2,50025$140.00-6.67%$140.00
$5,00050$133.33-11.11%$133.33
$10,000100$125.00-16.67%$125.00
$20,000200$116.67-22.22%$116.67

Each extra dollar buys less improvement than the one before it, because the original position keeps its weight in the average. The limit of the sequence is the price you are paying now.

Break-even price at different selling fees

Selling feeBreak-even priceMove needed from the price now
0%$133.3333.33%
0.25%$133.6733.67%
0.5%$134.0034%
1%$134.6834.68%

A fee on the way out raises the price the position has to reach, and the effect is larger on a position whose cost basis is close to the current price.

Shares needed to reach an average of $120

MeasureValue
Shares to buy at the current price150
Money needed$15,000
Shares after the purchase250
New average cost$120.00
Share of your account30%

The maths only has a solution while the current price is below the target average. Chasing a lower average with a large purchase concentrates the position, which is the risk that does not show up in the new average cost.

Position size from the risk you are willing to take

MeasureValue
Cash at risk$500
Risk per share$8.00
Shares to buy50
Position value$5,000
Share of the account10%
Capped by the position limitYes
Reward to risk at the target2.5 : 1

Sizing from the stop means the distance to the stop, not the size of the position, decides how much a losing trade costs. The share count falls as the stop gets wider, which is the opposite of what averaging down does.

$5,000 at $100.00 moves the average from $150.00 to $133.33, and the position now needs 33.3% from the current price to break even. Averaging down is not a strategy on its own: it improves the arithmetic only if the asset recovers, and it raises the amount at risk in the meantime.

This calculator shows the new average cost, the change from the old one, the price needed to break even including selling fees, how much would be needed to reach a target average, and a position size worked out from the risk you are willing to take rather than from the size of the fall.

How this average down calculator works

The new average cost

The new average is the total cost basis divided by the total shares: (existing shares × your average cost + money spent on the new purchase + fees) ÷ (existing shares + shares bought).

Because the existing position keeps its full weight, each additional purchase moves the average less than the one before it. Buying the same amount again halves the distance to the new price; buying a fourth as much moves it a quarter of the way. The average can approach the current price but never pass it.

Break-even and the fee on the way out

The break-even price is the cost basis divided by the shares, adjusted for the fee charged when you sell. A 1% selling fee on a $25,000 position adds about $250 to the price you need, and the effect is largest on a position whose cost basis sits close to the current price.

That is why the break-even price is a more useful number than the average cost: it is the actual price at which the round trip stops losing money.

The risk that the average cost hides

Averaging down lowers the average cost and increases the amount of money exposed to the same asset. If the price keeps falling, a larger position loses more in absolute terms even though the average looks better. The share of your account in one position is the number that measures this, not the average cost.

There is also a selection problem: the arithmetic works identically on a temporary fall and on a permanent decline, and at the time the two look the same. A position bought at a lower price only helps if the price recovers.

Sizing from risk instead

The position size section works the other way round. You decide how much of the account a losing trade may cost, and the distance to the stop decides the share count: shares = (account value × risk %) ÷ (entry price − stop price). A wider stop means fewer shares.

This is the discipline averaging down lacks: the amount at risk is fixed in advance, and adding to a position is a decision about whether the original reason still holds, not a way to lower a number on a screen.

Worked examples

Each example below was run through the calculator on this page when the site was built, so the numbers match what you see when you enter the same inputs.

100 shares at $150, adding $5,000 at $100

Shares you hold
100
Your average cost
$150.00
Price now
$100.00
Amount to add
$5,000.00
Fee on the new purchase
$0.00
Selling fee
0%
Target average cost
$120.00
Account value
$50,000.00
Risk per trade
1%
Entry price
$100.00
Stop price
$92.00
Maximum position size
10%
Target price
$120.00

Average cost after the new purchase

$133.33

150 shares and $20,000 of cost basis at a price of $100.00

Change in average cost
-11.11%
Break-even price
$133.33
Position worth now
$15,000.00
Shares added
50

The purchase buys 50 shares at a quarter of the original position size, so the average falls from $150 to about $133 rather than to the midpoint of the two prices.

Doubling the position at the lower price

Shares you hold
100
Your average cost
$150.00
Price now
$100.00
Amount to add
$15,000.00
Fee on the new purchase
$0.00
Selling fee
0%
Target average cost
$120.00
Account value
$50,000.00
Risk per trade
1%
Entry price
$100.00
Stop price
$92.00
Maximum position size
10%
Target price
$120.00

Average cost after the new purchase

$120.00

250 shares and $30,000 of cost basis at a price of $100.00

Change in average cost
-20%
Break-even price
$120.00
Position worth now
$25,000.00
Shares added
150

Buying 150 shares more takes the average to $120, which is the target. It also takes the position to $30,000 of cost basis, so the risk concentrated in one name has tripled.

A target average that needs a large purchase

Shares you hold
200
Your average cost
$80.00
Price now
$40.00
Amount to add
$5,000.00
Fee on the new purchase
$10.00
Selling fee
0.5%
Target average cost
$60.00
Account value
$40,000.00
Risk per trade
1.5%
Entry price
$40.00
Stop price
$34.00
Maximum position size
12%
Target price
$52.00

Average cost after the new purchase

$64.67

324.75 shares and $21,000 of cost basis at a price of $40.00

Change in average cost
-19.17%
Break-even price
$64.99
Position worth now
$12,990.00
Shares added
124.75

Reaching a $60 average from $80 at a $40 price needs a purchase worth more than the original position. The shares-needed table shows the size of that commitment before you make it.

Frequently asked questions

How is the new average cost calculated?

Add the money spent on the new purchase to the existing cost basis, add any fees, and divide by the total shares. Buying 50 shares at $100 into a 100-share position held at $150 gives (15,000 + 5,000) ÷ 150 = $133.33.

Does averaging down always make sense?

No. It lowers the break-even price, and it also puts more money into the same asset. Whether that is sensible depends on why the price fell and whether the reason you bought it still holds. The arithmetic cannot tell a temporary fall from a permanent decline.

Why does an extra purchase move the average less each time?

Because the existing position keeps its weight. Buying an amount equal to the position halves the distance between the average and the new price; buying half as much moves it a third of the way. The average approaches the current price but never passes it.

What price do I need to break even?

The cost basis divided by the shares, grossed up by any selling fee. Fees on both sides of a round trip mean the break-even price is above the average cost, and the gap grows with the fee and with how close the average is to the current price.

Should I average down or add to a winner?

Both change the risk profile. Adding to a winner concentrates in something that is working, adding to a loser concentrates in something that is not, and neither is a rule. Many traders fix the amount they will risk per position — as the position size section does — and let that decide whether an add is affordable.

How does the position size calculator work?

It divides the money you are willing to lose by the distance between the entry price and the stop: shares = (account value × risk %) ÷ (entry − stop). With $50,000 and 1% risk, a $100 entry and a $92 stop gives 62 shares, because each share is risking $8.

Does this calculator handle short positions?

No, it assumes a long position. For a short, the arithmetic is mirrored: averaging up increases risk, the stop sits above the entry, and the maximum loss is not capped by the share price falling to zero.

Assumptions and sources

  • Average cost arithmetic: new average = (existing shares × old average + new shares × new price + fees) ÷ (existing shares + new shares); break-even price = cost basis ÷ shares ÷ (1 − selling fee rate).
  • Position size arithmetic: shares = (account value × risk %) ÷ |entry price − stop price|, with an optional cap on the share of the account a single position may use.
  • This is not investment advice. Averaging down increases the amount of money exposed to one asset, and a lower average cost does not make a losing position more likely to recover.
  • Not modelled: tax on realised losses or gains, margin borrowing and its interest, the widened spread that often appears in a falling market, and the difference between the quoted price and the price an order actually fills at.

Last reviewed 2026-09-14. This page is an estimate tool, not financial, tax or legal advice.Read the full disclaimer.

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