How to Calculate Your Average Cost per Share (and Average Down)
Find your average cost per share across several purchases, and work out how many shares it takes to average down to a target price.
Published
Free tool: Stock Average CalculatorIf you've bought the same stock more than once at different prices, your real cost isn't any single purchase price. It's the average cost per share across all your buys, and it's the number that tells you whether you're up or down. This guide shows how to calculate it and how averaging down works, using the free Stock Average Calculator.
The formula
Average cost = total amount paid (including fees) ÷ total shares
It's a weighted average: bigger purchases count more.
Example:
| Purchase | Shares | Price | Cost |
|---|---|---|---|
| 1 | 100 | $50 | $5,000 |
| 2 | 50 | $40 | $2,000 |
| 3 | 50 | $35 | $1,750 |
| Total | 200 | $8,750 |
Average cost: $8,750 ÷ 200 = $43.75 a share. A simple average of the three prices would say $41.67, which is wrong because it ignores how many shares you bought each time.
At a current price of $42, your 200 shares are worth $8,400, so you're down $350, even though the price is above two of your purchase prices.
Averaging down
Averaging down means buying more after the price falls, which lowers your average cost. To bring the average to a target, you need:
Shares to buy = (target × current shares − current cost) ÷ (buy price − target)
To bring the average from $43.75 down to $40 by buying at $30: (40 × 200 − 8,750) ÷ (30 − 40) = 75 shares, costing $2,250. The target must sit between the new price and your current average.
Should you average down?
Averaging down only helps if the stock recovers. It makes sense when your reasons for owning the company still hold and the drop looks temporary. It's risky when the business is genuinely in trouble, because you're adding money to a losing position. Setting a maximum position size in advance helps keep one stock from dominating your portfolio.
Fees and taxes
Include commissions in the cost, since they raise your average. For taxes, brokers usually report each purchase lot separately. Average cost is the standard method for mutual fund shares, while for stocks the default is usually first in, first out unless you choose specific lots.
For the profit on a single trade, see How to Calculate Stock Profit.
How to use the Stock Average Calculator
- Open the Stock Average Calculator.
- Enter each purchase: the number of shares and the price per share. Add or remove rows as needed.
- Add the fee per purchase and, optionally, the current share price.
- To average down or up, enter your next buy price and the target average price.
- Read the results: your average cost per share, total shares, total cost and market value, the shares needed to reach your target, with charts of purchase prices against your average and the cost of each purchase, plus a table of your purchases.
Frequently asked questions
How do I calculate my average stock price?
Add up everything you paid, including fees, and divide by the total number of shares. 200 shares bought for $8,750 average $43.75 each.
How many shares do I need to average down?
Use (target × current shares − current cost) ÷ (buy price − target). To go from $43.75 to $40 with shares at $30, you'd need 75 more shares.
Is averaging down a good strategy?
It can be if the company is sound and the price recovers, but it increases your exposure to a falling stock. Decide on a maximum position size before you start.