Calculate your new average cost before adding to your position.
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Averaging down lowers your cost basis and can accelerate break-even. However, continued declines amplify losses. Always buy in stages and verify the company's fundamentals haven't deteriorated.
Stock averaging means buying additional shares when the price drops below your average cost, lowering your average entry price. PFlow's calculator lets you simulate the new average cost and break-even point before you buy.
Dollar Cost Averaging (DCA) is an investment technique where you buy additional shares when the stock price drops to lower your average purchase price. By lowering the average cost, even a small price rebound can help you recover your principal or turn a profit.
The final average price after additional purchases is calculated as follows:
For example, if you hold 100 shares at $100, and the price drops to $80 where you buy another 100 shares:
Averaging down means buying when the price drops to lower your average cost.
Pyramiding means buying more when the price rises to maximize profits from an uptrend.
This calculator accurately predicts how the average price changes in both scenarios.
Tip: Be cautious with averaging down. Rather than buying simply because the price has dropped, confirm the company's fundamentals are still strong and consider dollar cost averaging for safety.