Stock Average Calculator
Calculation Results
Total Shares
Total Investment
Average Cost / Share
The Smart Shopper's Strategy: How Stock Averaging Works
Imagine your favorite T-shirt goes on sale for 20% off, so you buy one. A week later, the store has a flash sale, and the same T-shirt is now 40% off. You buy another one. What was the average price you paid per T-shirt? It wasn't the original price, nor was it the final sale price. It was somewhere in between. You successfully "averaged down" your cost.
Stock averaging is the exact same principle applied to investing. When you buy shares of the same company at different prices over time, your actual cost per share isn't any single purchase price—it's the weighted average of all your purchases. This calculator does the math for you, helping you understand your true cost basis. This is crucial for knowing your real breakeven point and making informed decisions about when to sell.
Related Trading & Investment Tools
- Brokerage Calculator: After finding your average price, calculate net profit including all charges.
- Investment ROI Calculator: Measure the percentage return on your total investment.
- SIP Calculator: For a more disciplined, automated approach to regular investing.
Frequently Asked Questions
What is "Averaging Down"?
Averaging down is a strategy where an investor buys more of a stock after its price has fallen. This lowers the overall average cost per share, meaning the stock doesn't have to rise back to the original purchase price for the investor to make a profit. It's a way to turn a potential loss into a gain, but it also increases your exposure to a stock that might continue to fall.
Is averaging down a good strategy?
It can be, but it's risky. It's a good strategy if you have strong conviction in the long-term fundamentals of the company and believe the price drop is temporary. It's a bad strategy if you are throwing good money after bad into a fundamentally weak company whose stock is falling for good reason.
Does this calculator include brokerage fees?
No, this calculator focuses purely on the weighted average of the share prices. To calculate your true breakeven including all fees, first find your average price here, then use that as the "Buy Price" in our Brokerage Calculator.