Stock Average Down Calculator
Calculate your new average cost when buying more shares at a lower price. Enter up to 10 lots, see weighted average cost and break-even price, and find out how many shares to buy to hit a target average.
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Position Sizing: Averaging Down Without Concentrating Risk
The math of averaging down is simple. The risk management discipline is where most investors fail — buying more and more of a declining position until one stock dominates the portfolio.
Setting Position Limits Before You Start
Before buying any individual stock, set a maximum position size and treat it as a hard stop.
| Portfolio Size | 3% Max Position | 5% Max Position |
|---|---|---|
| $25,000 | $750 | $1,250 |
| $100,000 | $3,000 | $5,000 |
| $250,000 | $7,500 | $12,500 |
| $500,000 | $15,000 | $25,000 |
When you average down, count the purchase against this limit. If you have already deployed your maximum, do not add more — regardless of how compelling the thesis looks after another 20% drop.
The Tier System: Planning Purchases in Advance
Rather than reacting emotionally to drops, plan your purchase tiers before investing a dollar. Example: stock trades at $60. Plan: Tier 1 buy at $60 with one-third of your maximum position. Tier 2 buy at $45 with another third if it falls there. Tier 3 buy at $30 with the final third if it falls further. You only deploy full capital if it reaches all three tiers, and your exposure is capped from the start. If the stock never falls to Tier 2, you own a smaller position than planned — that is a good outcome, not a missed opportunity.
The Sell Signal vs the Average-Down Signal
Every price drop requires a decision: add more, hold, or sell. The correct answer depends entirely on whether your original thesis is intact. Ask specifically: has anything material changed about why I bought this? New competitive threat, management failure, balance sheet deterioration, or business model disruption — any of these are sell signals, not averaging-down signals. Market sentiment, sector rotation, and macro volatility on an otherwise unchanged business are potential averaging-down signals.
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