How to calculate your average stock price
When you buy the same stock more than once at different prices, your average price (also called average cost) is the total amount you paid divided by the total number of shares you own.
For example, if you buy 10 shares at $150 and later 5 shares at $120, you paid $1,500 + $600 = $2,100 for 15 shares. Your average price is $2,100 ÷ 15 = $140 per share.
Why your average price matters
Your average price is your break-even point: if the stock trades above it, your position is in profit; below it, it is at a loss. Adding the current price in the calculator shows your gain or loss in dollars and as a percentage.
Averaging down and dollar-cost averaging
Buying more shares after a price drop lowers your average price, which is often called “averaging down.” Investing a fixed amount on a regular schedule, regardless of price, is called dollar-cost averaging. Neither strategy guarantees a profit: a stock that keeps falling will keep losing value however low your average gets.
Cost basis and taxes
For U.S. taxes, the simple average above is usually not what your broker reports. Cost basis generally includes commissions and other fees. When you sell part of a position, firms treat the earliest shares bought as sold first (first in, first out) unless you choose specific shares, and the average cost method is available only in limited cases, such as certain mutual fund shares or shares bought through a dividend reinvestment plan. Use your broker’s statements for tax reporting.