Cost basis guide

How Many Shares Do You Need to Buy to Average Down?

Quick answer: Multiply current shares by the difference between the current and target averages, then divide by the difference between the target average and new purchase price.

Shares needed = current shares × (current average − target average) ÷ (target average − purchase price)

Reviewed October 8, 2026 · Published by ToolRicherly

Worked example

You own 100 shares at an average cost of $50. The stock trades at $40 and you want a $45 target average. The calculation is 100 × ($50 − $45) ÷ ($45 − $40), or 100 additional shares. Buying 100 shares at $40 creates 200 shares with $9,000 of combined cost, equal to a $45 average before fees.

Use the average down calculator with target price mode to test share quantities, fractional shares, fees, and required cash. Its purchase mode calculates the new weighted average when you already know the additional quantity.

When a target is impossible

The target must sit between the current average and new purchase price. Buying at $40 can move a $50 average toward $40, but never below $40. A $39 target requires a purchase below $39 or a different transaction.

New average cost formula

New average = (old shares × old average + new shares × purchase price + fees) ÷ total shares

A broker's reported basis may differ because tax lots, commissions, foreign exchange, corporate actions, and local tax rules can affect the record. Use broker documents for tax reporting.

Average down vs dollar-cost averaging

Averaging down adds to an existing position after a price decline. Dollar-cost averaging follows a schedule, investing equal amounts at regular intervals regardless of price. Neither guarantees a profit. A decline may reflect temporary volatility or permanent deterioration in the company.

Checks before buying more

Revisit the original investment thesis and new company information.
Calculate the position's share of the full portfolio after buying.
Keep emergency cash and near-term spending separate.
Compare the rebound needed from the new average with tolerable downside.
Include fees and currency conversion where relevant.

Frequently asked questions

Does averaging down recover a loss?

It lowers the combined break-even price but increases dollars exposed to the asset. It does not reverse the current loss.

Can I use fractional shares?

Yes, if the broker supports them. Keep enough decimal precision and round only to an accepted order quantity.

Does this work for cryptocurrency?

The weighted-average math does, but fees, spreads, and tax-lot treatment differ. The formula does not assess investment risk.

Sources and methodology

See the SEC Investor.gov definition of dollar-cost averaging and our calculation methodology. Educational use only; this guide does not recommend buying a security.