How the average price works
When you buy an asset in several steps at different prices, your average cost is the total money invested divided by the total quantity. Large purchases weigh more than small ones, so it is a weighted average, not the simple mean of your prices.
The calculator also compares that average with the current price. If the price is below your average, the rise needed to break even tells you how far it must climb before you stop losing. The what-if box shows what your average and your break-even rise would be if you bought more at today's price.
What averaging down does and does not do
Buying more at a lower price pulls your average cost down, so the price needs to recover less to get you back to even. It does not change whether the asset will recover, and it puts more money into a position that is already losing. The chart shows the effect: each extra unit moves your average toward the current price, but by less and less. It never reaches it.
Averaging down can make sense when your original thesis is intact and the position still fits your risk rules. It becomes dangerous when it turns a small loss into a position far larger than you planned. Check the size with the position size calculator before you add.
The formulas
profit or loss = (current price − average price) × total quantity
rise needed = average price ÷ current price − 1After buying q more at the current price, the new average is (total cost + q × current price) ÷ (total quantity + q).
Worked examples
Three purchases on the way down
You buy 10 units at $100, 10 at $85 and 20 at $70. Total cost is $3,250 for 40 units, an average of $81.25. The price is now $60, so you are down 850 dollars and need a 35.4% rise to break even.
What buying 20 more at $60 does
Adding 20 units at $60 costs $1,200 more. The average falls to $74.17 and the rise needed drops to 23.6%. But you now have $4,450 invested instead of $3,250.
Equal amounts are not equal units
Buying $1,000 of an asset at $10 and another $1,000 at $5 gives 100 + 200 units. The average cost is $2,000 ÷ 300 = $6.67, not the simple mean of $7.50, because you bought more units at the lower price.
Frequently asked questions
How do I calculate the average price of my purchases?
Add up the cost of every purchase (price times quantity) and divide by the total quantity. Enter each buy in the calculator and it is done for you.
What does averaging down mean?
Buying more of an asset after its price has fallen, which lowers your average cost per unit and the rise needed to break even.
Is averaging down a good idea?
It depends. It can work when your original reasoning still holds and the size stays within your risk limits. It is risky when it increases a losing position without a plan or when the trend keeps falling.
Why does buying more not fix my average completely?
Because your average moves toward the new price but never reaches it. The more units you already hold, the less a new purchase moves the average.
What is the difference between average price and break-even price?
Average price is your cost per unit. The break-even price also includes fees, so it is slightly higher for a long position. Add fees into your purchases if you want that precision.
Does this work for crypto and forex?
Yes for any asset you buy in units at different prices. For leveraged positions, use the quantity in units and remember that margin and funding costs are not included.
Averaging down is a decision, not a plan.
Before adding to a losing position, check whether the trend supports it. These indicators help you judge that.
Guides that explain it
Last updated October 2026. For education only. Not financial advice. Results depend on your inputs and cannot predict future performance.