Average Down Calculator
Blend multiple entries into one average price
Your entries
How average entry price works
Your average entry is a size-weighted average, not a simple average of the prices you paid. This distinction is the whole game: a large add at a low price pulls your average down far more than a small one.
total cost = Σ (price × size)
total size = Σ size
average = total cost ÷ total sizeWorked example
Buy 10 units at $100, then 10 more at $90. Total cost is $1,900 for 20 units, so your average is $95 — you now need a 5.6% move from $90 to get back to flat, rather than 11.1% from your original entry.
Now change one thing: make the second buy 30 units at $90 instead of 10. Total cost $3,700 for 40 units, average $92.50. Better average, but your exposure doubled. If price keeps falling to $80 you are down $300 on the first version and $500 on the second. That is the trade-off in one number, and it is the reason the size of your adds matters more than the fact that you added.
When averaging down works, and when it does not
It works when the ladder was planned before you opened — you decided in advance where the adds go and how big they are, and the total risk across all of them was sized as one position. That is a scaling strategy, and it is perfectly sound.
It fails when it is a reaction to being wrong. Adding because a position hurts increases exposure to the exact thesis the market is currently rejecting, and on leverage it drags your liquidation price toward current price at the same time. The improved average feels like progress while the actual risk gets worse. Check what the add did to your liquidation with the liquidation calculator before committing to it.
Averaging down vs DCA
The arithmetic is identical; the intent is not. Dollar-cost averaging is a fixed schedule of buys, indifferent to price, used to build a long-term spot position without timing the market. Averaging down is discretionary and reactive. Confusing the two is how a planned investment turns into an oversized bag — one has a rule, the other has a feeling.
Frequently asked questions
How do I calculate average entry price?
Multiply each entry price by its size, add those together, then divide by total size. It is a size-weighted average, not a simple average of the prices — a large add at a low price moves your average far more than a small one, which is exactly why position sizing on adds matters.
Is averaging down a good strategy?
It works when your thesis is intact and you planned the adds in advance with a sized-out ladder. It is dangerous when it is a reaction to being wrong, because it increases exposure to the position that is already hurting you and moves your liquidation price closer. The calculator shows the second effect clearly.
Does averaging down move my liquidation price?
Yes, and usually against you on a leveraged position. Adding size increases the margin requirement while your average entry improves, and the net effect on a losing leveraged trade is typically a liquidation price that creeps toward current price.
What is the difference between averaging down and DCA?
Dollar-cost averaging is a fixed schedule of buys regardless of price, used to build a spot position over time. Averaging down is a discretionary response to a price drop in a position you already hold. The arithmetic is identical; the psychology and the risk profile are not.