Average Down Calculator Online | Stock Averaging Calculator
Optimize your investment strategy with our comprehensive average down calculator and stock averaging calculator. Calculate how purchasing additional shares at lower prices affects your average cost basis using our cost basis calculator and investment averaging tool for smarter share price averaging decisions.
Initial Position
Additional Purchases (Averaging Down)
Target Price (Optional)
How Average Down Works
Averaging down is an investment strategy where you purchase additional shares of a stock you already own at a lower price. This reduces your average cost per share, potentially making it easier to break even or profit when the stock price recovers.
This calculator helps you determine your new average cost per share after making additional purchases at lower prices. You can also see your potential profit or loss at a specified target price.
Typical Use Cases
Our average down calculator is a valuable tool for investors who want to reduce their average cost per share in a declining market using stock averaging calculator principles. When you believe in a company's long-term prospects but the stock price has fallen, averaging down can be a strategic way to position yourself for potential future gains.
Investors use this cost basis calculator strategy to build larger positions in quality stocks during market corrections or when a stock temporarily falls due to short-term issues. Financial advisors use our investment averaging tool to demonstrate how averaged-down positions can recover more quickly than initial investments, helping clients understand the potential benefits with our share price averaging calculator for strategic portfolio management.
Formula
Average Cost Per Share
= Total Cost of All Purchases ÷ Total Number of Shares
- Initial Position: Initial shares × initial price per share
- Additional Purchases: Additional shares × price per share (for each purchase)
- Total Cost: Initial position cost + sum of all additional purchase costs
- Total Shares: Initial shares + sum of all additional shares purchased
- Average Cost: Total cost ÷ total shares
Understanding Averaging Down
Averaging down is an investment strategy where an investor purchases additional shares of a previously established position in a stock after its price has fallen. The result is a decrease in the average cost per share.
Potential Benefits:
- Reduces your break-even point
- Accelerates potential returns when prices recover
- Allows accumulation of more shares of quality companies during downturns
Important Considerations:
- Only average down in investments you believe have strong long-term prospects
- Consider what has caused the price decline before averaging down
- Don't exhaust your capital on a single declining position; maintain diversification
- Set limits on how much you're willing to invest in a single position