📉 Stock Averaging Calculator
What Is Averaging Down?
Averaging down (mooltagi, 물타기) is the strategy of buying additional shares of a stock you already own after its price has fallen. By purchasing more at a lower price, you reduce your average cost per share — which lowers the break-even price the stock needs to reach for you to recover.
📐 Formula: Average Cost = Total Capital Invested ÷ Total Shares Held
Advantages of Averaging Down
1. Lower Break-Even Price
Buying more at a lower price reduces your average cost, so you can profit even if the stock never recovers to your original purchase price.
2. Faster Recovery
The lower your average cost, the smaller the percentage gain needed to climb back into profit.
Risks You Must Know
1. Concentration Risk
Continuing to buy a falling stock increases the share of a single name in your portfolio. If the stock keeps dropping, your losses snowball.
2. The Sunk-Cost Trap
Don't average down just because you're already underwater. Ask honestly: if you didn't already own the stock, would you buy it at today's price?
3. Liquidity Risk
Averaging down requires fresh capital. If your cash reserves run low, you may miss other opportunities — or be caught short when an emergency expense hits.
Smart Averaging-Down Strategy
- Stage your buys: Split additional capital into 2–3 tranches rather than going all-in at once.
- Recheck the fundamentals: Confirm the company's earnings, balance sheet, and business model are still healthy before adding to the position.
- Set a maximum position size: Decide upfront the maximum portfolio weight this single stock is allowed to take.
- Define a stop-loss: If your investment thesis is broken, a quick stop-loss is often better than indefinite averaging down.
* For reference only. Investing carries the risk of principal loss.
Do your own research and consult a professional before making investment decisions.
