Why your average price is easy to get wrong
Most people remember the price of their first buy, or a rough midpoint of all of them. Neither is your actual cost. If you bought more shares at one price than another, the average leans towards the bigger purchase — and then fees nudge it up again.
A worked example
Say you built a position in three steps:
- 500 shares at PKR 42.50
- 300 shares at PKR 39.80
- 200 shares at PKR 37.10
That's 1,000 shares for PKR 40,610, an average of PKR 40.61. With costs of 0.15% on each buy and sell, your real cost is about PKR 40.67 a share, and the stock needs to reach roughly PKR 40.73before selling everything breaks even. At today's price of PKR 40.25, selling would mean a loss of around PKR 480 — about 1.2% — even though the price is above two of your three buys.
A word on averaging down
Buying more as a price falls lowers your average, and that number moving in your favour can feel like a win. But the recovery you need hasn't changed — and you now hold more of a stock that's been going the wrong way. The drawdown recovery calculator shows why a deep fall is so hard to climb out of.
There's a real difference between planned scaling in — deciding up front to buy in three stages, with a total size set by the position size calculatorand a final exit price — and adding to a loser because selling would mean admitting it's a loser. The first is a plan. The second is hope.
Frequently asked questions
How do I calculate my average cost per share?
Add up what you paid for every purchase (shares × price for each) and divide by the total number of shares. 500 at PKR 42.50, 300 at PKR 39.80 and 200 at PKR 37.10 cost PKR 40,610 for 1,000 shares — an average of PKR 40.61.
Why is my break-even higher than my average price?
Because you pay costs on the way in and on the way out. Commission and taxes on the buys push your real cost per share up, and the costs of selling mean the sale price has to be a little higher again for you to walk away with nothing lost.
Is averaging down a good idea?
It lowers your average price, which feels like progress, but it also increases how much you have riding on a stock that is going the wrong way. It can work when it's part of a plan made in advance — buying in planned stages, with a total size and a final exit you've already decided. It's dangerous when it's a reaction to a loss.
What fee percentage should I use?
Whatever your broker charges per transaction, plus any taxes and levies applied per trade, expressed as a percentage of the trade value. Brokers' schedules differ, so check yours rather than relying on a typical figure.
Does this include dividends or bonus shares?
No — it only uses the purchases you enter. Bonus shares increase your share count without costing anything, so your true average is lower than shown; dividends received also reduce what the holding has effectively cost you. For tax records, go by your broker's statements rather than this calculator.
These calculators do arithmetic on the numbers you type in. They're for learning and planning, not investment advice, and they don't tell you what to buy or sell. Nothing you enter leaves your browser. See the terms & risk disclaimer.