Purchase History
Portfolio Impact
A Stock Average Calculator is a crucial portfolio management tool for investors and day traders. It calculates your true break-even price when you buy shares of the exact same company multiple times at varying prices. Knowing your average cost is the only way to accurately determine if a trade is profitable.
How Stock Averaging Works
Stock averaging math is simple. You must find the total amount of money you have invested and divide it by the total number of shares you own. It is completely volume-weighted, meaning larger purchases will pull the average price closer to their specific purchase price.
New Average Price = Total Money Invested / Total Shares Owned
For example, if you own 100 shares at 50 dollars each, your investment is 5000 dollars. If the stock drops and you buy 50 more shares at 40 dollars each, you spend an extra 2000 dollars. Your total invested is now 7000 dollars for 150 shares. Your new average price drops to 46.66 dollars per share.
How to Use This Investment Tool
- Enter the number of Current Shares you already hold in your portfolio.
- Input the Current Average Price you originally paid for those initial shares.
- Enter the number of New Shares you plan to purchase today.
- Input the current market price or your target New Purchase Price.
- Review your New Average Price instantly to see your new portfolio break-even point.
Frequently Asked Questions
What does Averaging Down mean?
Averaging down occurs when you buy more shares of a stock at a price lower than your original average. This strategy lowers your overall cost basis, meaning the stock does not need to rise as high as your initial purchase price for you to break even or turn a profit. It is a common strategy during market corrections.
Is Averaging Up a bad idea?
Not necessarily. Averaging up happens when you buy more shares at a higher price than your original average. While it raises your break-even point, it is often done by investors who believe a winning stock will continue to break out and grow higher over the long term.
Does this calculator work for cryptocurrency?
Yes. The mathematics for volume-weighted averaging are identical whether you are trading traditional stocks, index funds, options contracts, or cryptocurrencies. Simply enter your coin quantities and coin prices to find your average crypto cost.