Why is my average not the midpoint of my two prices?

Because the purchases were different sizes. The average is weighted by how many shares you bought at each price, so the larger purchase dominates.

Investmentstocks

Stock Average / Cost Basis Calculator

The weighted average cost of a holding built over several purchases, which is your real break-even. It is not the average of the prices: a larger purchase pulls the average further.

Also called: averaging down calculator, weighted average share price.

Average cost per share

$220.00

$220.00 across 250 shares, a total investment of $55,000.00. Averaging down moved your break-even from $250.00 to $220.00.

Total shares

250

Total invested

$55,000.00

Your first price

$250.00

Move in your break-even

-12%

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

Total money spent divided by total shares held. The common error is averaging the prices themselves, which is only right when every purchase was the same size. Buying more at a lower price pulls the average down faster than buying a token amount, and the weighted figure is what your position actually has to clear to break even.

average price = total money spent / total shares held

q_i: Shares in each purchase (shares)
p_i: Price paid in each purchase (currency)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

two unequal purchases

First purchase: shares: 100
First purchase: price per share: 250
Second purchase: shares: 150
Second purchase: price per share: 200
Third purchase: shares: 0
Third purchase: price per share: 0

Average cost per share$220.00

55,000 over 250 shares; note it is not 225, the midpoint of the prices

Open this example

equal sizes do land on the midpoint

First purchase: shares: 100
First purchase: price per share: 250
Second purchase: shares: 100
Second purchase: price per share: 200
Third purchase: shares: 0
Third purchase: price per share: 0

Average cost per share$225.00

boundary: the only case where averaging the prices is also right

Open this example

Method and limits

What it assumes

Brokerage and taxes are excluded. Add them to the prices to include them.

What it deliberately does not model

Averaging down lowers your break-even and raises your exposure to the same position. It is a risk decision as much as an arithmetic one.

Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator

Frequently asked questions

Why is my average not the midpoint of my two prices?: Because the purchases were different sizes. The average is weighted by how many shares you bought at each price, so the larger purchase dominates.