Bought more after a dip? Enter your two purchases to get your new average cost per share, total shares and total cost — so you know exactly where the position now breaks even.
Answer first: averaging down is buying more shares after the price drops, which pulls your average cost per share lower. This average down calculator adds up everything you spent across both buys and divides by your total shares, giving the new cost basis that sets where your whole position breaks even.
New average = (Shares₁ × Price₁ + Shares₂ × Price₂) ÷ (Shares₁ + Shares₂)
Example: 100 shares at $50 ($5,000) plus 100 shares at $40 ($4,000) gives 200 shares for $9,000 — a new average of $45.00. The stock now only needs to reach $45, not $50, for you to break even.
Lowering your break-even can feel like a win, and sometimes it is — if the business is healthy and the dip was noise, you bought quality at a discount. But the same move that lowers your average also doubles down on a single position. If the stock keeps falling because something is genuinely wrong, you've simply lost more money faster. Averaging down rewards conviction backed by research and punishes hope.
The two are often confused. Dollar-cost averaging buys a fixed amount on a schedule no matter what the price does — a calm, automatic habit. Averaging down is a deliberate, emotional decision to buy because the price fell. One spreads risk over time; the other concentrates it on a single conviction. Knowing which you're doing is the difference between disciplined investing and chasing a falling knife.
Reality check: A lower average cost does not make a bad company a good investment. Averaging down concentrates risk and can compound losses on a declining business. This is an educational calculator, not financial advice — verify your own numbers and see the U.S. SEC at investor.gov.
Pair it with the break-even calculator, the dollar-cost averaging calculator, the position size calculator, and read about how to diversify a portfolio.
Last updated 25 June 2026 · Written by Mustafa Bilgic. Educational only — not financial advice.
Averaging down means buying more shares of a stock you already own after its price has fallen, which lowers your average cost per share. It reduces the price at which the position breaks even, but it also increases the money you have at risk in one stock.
Add the total dollars spent across both buys and divide by the total number of shares. New average = (shares1 × price1 + shares2 × price2) ÷ (shares1 + shares2). The result sits between your two purchase prices, weighted by how many shares you bought at each.
It can work if the company is fundamentally sound and the price drop is temporary, since you buy quality cheaper. But it is dangerous on a declining business — you throw more money into a losing position. It also concentrates risk, working against diversification.
Dollar-cost averaging invests a fixed amount on a regular schedule regardless of price. Averaging down is a deliberate decision to buy more specifically because the price dropped. One is a passive habit; the other is an active bet that the dip will recover.