Stock Average Down Planner

How to calculate average cost when buying more shares

Your average cost weights each purchase by its share count, so a large buy at a low price moves the average more than a small one. It is also your break-even before fees.

The planner also works backward. Enter the next purchase price and the average you want, and it tells you the shares and cash that would take. The answer is often much larger than expected, which is useful to see before adding to a losing position.

Average cost = (shares₁ × price₁ + shares₂ × price₂ + …) ÷ total shares. Shares to buy = shares × (average − target) ÷ (target − buy price).

Worked example

You bought 50 shares at $100 and 75 shares at $85. The cost is $5,000 + $6,375, or $11,375, for 125 shares, which averages $91.00. A simple average of the two prices would wrongly say $92.50.

To bring the average down to $85 by buying at $70, you need 125 × ($91 − $85) ÷ ($85 − $70), which is 50 more shares and $3,500 of cash.

What the result does not account for

• Why the stock fell. A lower average does not make the position a better one.
• The size of the position as a share of your account, which grows with every purchase.
• Commissions, dividends and tax lots. A broker may report a different basis, and wash sales can change it.

Frequently asked questions