How to calculate your average price when averaging down
Short answer: new average = (current average × current shares + new price × new shares) ÷ (current shares + new shares). With several buys, add every price × quantity on top and every quantity on the bottom.
Worked example
You hold 40 shares at an average of 52,300. You plan to buy 20 more at 44,000. Cost so far: 52,300 × 40 = 2,092,000. New buy: 44,000 × 20 = 880,000. Total cost 2,972,000 ÷ 60 shares = 49,533.33. Your average drops by 2,766.67, about 5.3%.
Several buys at different prices
Buying 10 at 46,000 and 10 at 42,000 instead: (2,092,000 + 460,000 + 420,000) ÷ 60 = 49,533.33. Same total cost, same average: only the total money and total shares matter.
Buying by amount instead of shares
If you plan to spend a fixed amount, shares = amount ÷ price. 500,000 at 44,000 buys 11.36 shares (or 11 whole shares if fractions aren't allowed).
Common mistakes
- Averaging the prices instead of weighting by quantity (the "4th row is wrong" problem in simple calculators).
- Forgetting fees: add each buy's fee to the cost if you want your true break-even.
- Using the average after a partial sell incorrectly: see the partial sell guide.
Doing it with AvgNote
Open the Avg down tab, load a stock from your holdings or type the average and quantity, and add planned buys by shares or amount. The new average and a one-line explanation update as you type, and one tap logs the buys to your ledger.