IronStats

Free Stock Trading Calculators (Stock Average Calculator)

 

Tired of averaging down and increasing your risk exposure? Well, if you knew how to read an oversold pattern, then you might not have to. Luckily for me, I learned how to do just that with the help of some stock trading lessons. I’m not saying it’s easy but with some application and a decent  stock average calculator you can still come out a winner when the market moves against you.

Thanks to their insights, I found out how to pick the right entry points for stocks, as well as when to cut my losses and bail when I found them going into oversold status. That’s not to say that averaging down doesn’t have a time and place in a trader’s strategy. Sometimes, if you’re in a stock for the long run, using an average down calculator can be very helpful for bringing your average price point down and reducing the cost basis of your position.

Average Stock Calculator

Original Shares
Purchase Price *
New Shares
New Purchase Price *
Buy Commission

Total Shares
Total Cost
Average Price Per Share

Enjoyed Using Our Free Stock Average Calculators?

We recommend that you sign up for monthly lessons and mentorship from our favorite stock trading experts. Plus, you’ll get access to a live message board where you can find me and tons of other self-made traders talk shop.

If you’re serious about investing in your trading skills, I suggest you sign up today. I’m a member there, and I learned more in a few months than years of costly trading by trial and error. Jasond Bond and his team of trading mentors have decades of experience in self-directed investing.

Since the early 2000s, they’ve successfully built a trading empire based on a solid multi-sectoral system with various tools, scanners, and charts that will help you make more winning trades, and fewer losing ones—far fewer.

Percent Gain Calculator

Calculate the percentage change of your stock trades.

Increase/Decrease From: To:
Percent Gain:

How the Average Stock Price Calculator Works

The average price is multiplied by the number of times it occurs. The results are added together and then divided by the total number of occurrences. 

For example, let’s say you buy 100 shares at $10 each, then you buy another 100 shares at $5. The total number of shares is 100 times 2, which equals 200. In total, you paid 100*$10 and 100*$5. The total cost is $1,500, which is now divided by the total number of shares.

The total cost divided by the total number of shares is $1,500/200, which equals $7.5. You now have a position in the stock for 200 shares at a lower price than your initial trade. For your trade to break even the price of the stock must reach $7.5 instead of $10.

What is an Average Down Strategy?

The stock average calculator is used by stock traders when they follow the strategy known by the same name. The average down strategy consists of buying stocks of the same company as the price continues to decline. The calculator adds up all the trades in the stock and gives you the average price.

The idea is that you will end up with an overall position of that stock at a lower price than if you simply held on to the initial trade. As the stock’s price continues to fall and you continue to buy new shares at cheaper prices. And the average price of the shares you own also falls.

The strategy brings an immediate advantage. If your average stock price is lower, it will be easier to start making a profit when the price of the stock starts to rise again. This strategy should be contemplated before initiating your first buy trade. 

If your total position is 100 shares and you buy 100 shares in your first trade, you will be overexposed to this stock as the price falls and you buy more shares. For the strategy to be effective you should buy the same amount as the initial trade.

So, if you buy 100 shares you would then need to buy another 100 shares when the price falls. Now you would have twice the exposure in the stock compared to what you had planned to hold originally.

To avoid this situation and have the possibility of averaging down if the stock price falls, you would need to buy a much smaller amount in your first trade. Using a smaller trade volume in your initial buy allows you the room you need to average down. 

Still not crystal clear? Check out this explainer from Barclays Investment Solutions to learn more about how averaging down works in practice.

Double-Edged Sword

The average down strategy is a double-edged sword. The opportunity you have from buying shares at lower prices as the market falls means you should also initiate the first trade with a fraction of your total number of shares. 

If your total exposure to a stock is, say, 100 shares, and you are going to implement the average down strategy, you would need to buy 50 shares initially or 33. Reducing your exposure to the stock in your initial trade means that if the price never falls you will have missed out on buying the stocks at a low price.

You would then have to buy the remaining shares at higher prices, reducing the overall profit from the trade. However, this strategy is a defensive one when used with the appropriate risk control. If you are buying into a stock that has already risen sharply you may want to keep some firepower at hand in case the price experiences a correction.

Note that averaging down is one of only several strategies for risk management when actively investing. Savvy investors may want to combine other risk management tools with averaging down in order to safeguard their capital from losses.

Not Happy With Your Stock Trading Returns?

The reason I call this tool a “Percent Gain Calculator” is that you should be making gains on your trades. If you aren’t, then, let’s be honest, you probably need a hand with your trading. After all, the market has made countless millionaire traders over the past few years. There’s no reason why you can’t include yourself among them.

Take your trading game to the next level. Sign up for the best stock trading tools I’ve had the chance to use.

 

Stock Average Calculator FAQs

To calculate your actual profits from a stock, first calculate the amount you paid to purchase each stock. Then, find the cost basis for your total investment (i.e., all fees and commissions you paid to both buy and sell). Subtract the cost basis of your investments from the proceeds derived from your stock sales to find your total stock profits. If the cost basis exceeds the proceeds, then you've taken a loss on the stock.

It's difficult to say whether a stock will increase or decrease in value with any degree of certainty. However, intrinsic value indicators such as a stock's price-earnings (P/E) ratio, earnings per share (EPS), and forward price-to-earnings are all strong historical indicators of a stock's growth potential.

The most common stock trading tools include features such as screeners (i.e., market-wide information regarding trending stocks and sell signals), charting software, stock simulators, newsletters, and chat forums.

In most cases, yes. Many successful traders have built their careers on foundations built through stock trading masterclasses and lessons bundled with stock research and charting software. For many, these are necessary aspects of learning how to trade successfully and manage risk to a degree that matches one’s risk tolerance level.