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Average Down Calculator

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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.

Average Down Calculator - Danfio

https://danfio.com/tools/average-down-calculator/ - printed from this page

Currency: USD ($) - display only, nothing was converted

The shares you already hold, before this purchase.

$

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

$

The price you would buy at now; the new average lands between it and your old cost.

$

How much money goes into the new purchase; the fee is taken out of it.

$

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

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

$

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

$

Used for the position size section below.

The share of the account you are willing to lose on one trade; it sets the position size.

$
$

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

$

Results update as you type. Nothing leaves your device.

Currency symbol

Symbol only - nothing is converted and no exchange rate is used. Figures quoted in the explanation text stay as the sources publish them.

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% From $150.00
Break-even price
$133.33 No selling fee applied
Position worth now
$15,000.00 -$5,000 against the cost basis
Shares added
50 For $5,000

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 math 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.

About this average down calculator

Treat averaging down as a decision about exposure, not a rescue. Buying more after a fall pulls the average cost toward the current price, but it also puts more money on the same bet, and the two effects run in opposite directions. This page shows the new average, the break-even price and the position size the risk implies.

The cost basis is the total spent divided by the shares held, and the break-even price adds the selling fee on the way out, which is why it sits above the average you see on screen. A risk-based size fixes in advance what a loss may cost. Nothing departs your device: every position, price and fee is held locally while the arithmetic runs.

It does not model tax on realized gains, margin interest, the wider spread in a falling market, or the gap between the quoted price and the fill. Read the result as an estimate from your own figures, not a signal that a falling position will recover. Averaging down only helps if the price comes back, so confirm your reason still holds before you add.

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). Every input is clamped at zero, so a blank field simply contributes nothing.

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 fifth of the way. The average can approach the current price but it never passes it, and it cannot go below the price of the last purchase.

The fee is part of that arithmetic in two ways. It is taken out of the money before the additional shares are bought, so a fixed fee buys fewer shares at that price, and it is then added into the total cost basis, so the fee sits inside the number the average is built from. Both effects push the new average up, which is why the calculator asks for the fee instead of guessing at 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: cost basis ÷ shares ÷ (1 − selling fee rate). 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 selling fee has to be earned back before a single dollar of profit exists, so the break-even always sits above the average you see on screen, and the gap widens as the fee grows.

On the same inputs you can set a target average instead of a fixed spend. The shares needed to reach it only pull the average down while the new price is below the target — buying at or above the target raises the average, which is the opposite of the goal, so there is nothing to compute there.

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.

Adding after a fall changes two things at once — the average cost and the size of the exposure — and they run in opposite directions. A lower average is bought with more money at risk, so judging the trade on the average alone can hide the extra exposure being added in the same transaction.

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, because each share risks more.

The share count is rounded down, and an optional ceiling caps how much of the account a single position may use. When that cap binds, the page says so, because the risk-based size has been limited by the concentration rule you set.

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.

The selling fee lifts the break-even price

Shares you hold: 200 · Your average cost: $50.00 · Price now: $40.00 · Amount to add: $2,000.00 · Fee on the new purchase: $0.00 · Selling fee: 1% · Target average cost: $45.00 · Account value: $30,000.00 · Risk per trade: 1% · Entry price: $40.00 · Stop price: $35.00 · Maximum position size: 10% · Target price: $44.00

Average cost after the new purchase

$48.00

250 shares and $12,000 of cost basis at a price of $40.00

Change in average cost: -4% · Break-even price: $48.48 · Position worth now: $10,000.00 · Shares added: 50

Adding $2,000 at $40 takes 200 shares at $50 to 250 shares at an average of $48, yet the 1% selling fee puts break-even at $48.48, so getting your cost back still leaves the position in the red.

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

  • 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); shares = (account value × risk %) ÷ |entry price − stop price|.
  • 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.
  • Runs in your browser; nothing is uploaded.

Last reviewed 2026-09-14. Not investment or insurance advice; quotes come from a licensed provider. Read the full disclaimer.

Where a figure on this page comes from an official agency — HUD, IRS, FICO or a state body — the site keeps a dated snapshot of the source page in its sources library, and a scheduled job re-checks that snapshot, so the number can be traced back to the document it came from.

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