Your Stock Purchases

Purchase 1
$
Cost: $5,000.00
Purchase 2
$
Cost: $2,250.00

Break-Even Analysis (optional)

$
Enter to see your gain/loss

Results

Average Price $48.33 per share
Total Shares 150
Total Investment $7,250.00
Break-Even Price $0.00
Current Value $0.00
Gain/Loss $0.00 (0.00%)

How It Works

The Formula:

Average Price = Total Investment / Total Shares

Example:

  • Purchase 1: 100 shares @ $50 = $5,000
  • Purchase 2: 50 shares @ $45 = $2,250
  • Total: 150 shares, $7,250 invested
  • Average Price: $7,250 / 150 = $48.33

Understanding Stock Averaging

What is Average Stock Price?

Your average stock price (also called cost basis) is the weighted average price you paid for all shares of a particular stock. It's crucial for understanding your true investment performance and calculating capital gains for tax purposes.

What is Averaging Down?

Averaging down is an investment strategy where you buy more shares of a stock after its price has fallen. This lowers your average cost per share, reducing the price needed to break even. While this can be beneficial if the stock recovers, it also increases your exposure to a potentially declining asset.

When to Average Down

  • Do average down if you believe the stock is undervalued and fundamentals remain strong
  • Don't average down just because the price dropped - reassess your investment thesis first
  • Consider your overall portfolio diversification before increasing position size
  • Set limits on how much of your portfolio any single stock can represent
Tip: Keep records of all your purchases including dates, prices, and fees. This information is essential for calculating capital gains when you sell.

Frequently Asked Questions

Average stock price (cost basis) is the weighted average price you paid for all shares of a stock. It's calculated by dividing your total investment by the total number of shares owned. This metric helps you understand your actual profit or loss when selling shares.

Averaging down means buying additional shares of a stock after its price has fallen, thereby lowering your average cost per share. While this can reduce your break-even point, it also increases your exposure to that single stock, adding risk if the price continues to decline.

Break-even price is the stock price at which you would neither make nor lose money on your investment. For a simple calculation (excluding fees), it equals your average cost per share. If you include trading fees or commissions, your break-even would be slightly higher.

It depends. Averaging down can be beneficial if you believe the stock is undervalued and will recover. However, consider: Why has the price fallen? Has anything fundamentally changed? Can you afford to lose more? Never average down blindly - always reassess the investment thesis first.

This calculator provides the basic average price without fees. Most modern brokerages offer commission-free trading for stocks, making the basic calculation sufficient. If you have significant fees, manually add them to your total investment before dividing by shares.
Disclaimer

This calculator is for educational and informational purposes only. It does not account for trading fees, taxes, dividends, or stock splits. Always consult with a qualified financial advisor before making investment decisions. Past performance does not guarantee future results.

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