Calculate your new average cost when buying more shares at a lower price
See how different purchase amounts affect your average price:
| Additional Shares | Additional Cost | New Average Price | Price Reduction |
|---|
Averaging down is NOT always a good strategy. Consider these risks:
• You're investing more money into a losing position
• The stock could continue to decline, increasing your losses
• You may be experiencing confirmation bias (refusing to admit you were wrong)
• This increases your exposure to a single stock (concentration risk)
Only average down if: Your original investment thesis is still valid, company fundamentals remain strong, and you have capital you can afford to lose.
Averaging down means buying more shares at a lower price to reduce your average cost per share.
Formula: New Average = (Original Cost + Additional Cost) ÷ Total Shares
Example: You own 100 shares at $50 ($5,000). You buy 50 more at $40 ($2,000). New average = $7,000 ÷ 150 = $46.67
• Temporary Setback: Stock dropped due to short-term bad news, not fundamental problems
• Market Overreaction: Price decline is not justified by company performance
• Strong Fundamentals: Company still has solid earnings, revenue growth, and business model
• Long-term Investment: You're investing for years, not trading short-term
• Available Capital: You have extra money you can afford to lose
• Fundamental Issues: Company has serious business problems or declining market share
• Broken Thesis: The reason you bought the stock is no longer valid
• Catching a Falling Knife: Stock is in free fall with no support level
• Limited Capital: You're using money you can't afford to lose
• Revenge Trading: You're emotionally trying to "get even" with the market
• Cut Your Losses: Accept the loss and move on (sometimes the best decision)
• Dollar-Cost Averaging: Buy fixed amounts at regular intervals instead of trying to time dips
• Diversify Instead: Use the money to buy a different stock and reduce concentration risk
• Wait for Confirmation: Let the stock show signs of recovery before adding more
• This calculator is for educational purposes only
• Not financial or investment advice
• Averaging down increases risk and potential losses
• Past performance does not guarantee future results
• Always consult with a qualified financial advisor