What is dollar cost averaging?

Dollar cost averaging is investing a fixed amount at regular intervals regardless of price. This naturally lowers your average cost over time.

Should I average down on a losing stock?

Averaging down reduces your break-even price but increases risk if the stock continues falling. Only average down on fundamentally strong stocks.

How does average price affect taxes?

Your average purchase price becomes your cost basis for calculating capital gains tax when you sell.

How to Calculate Stock Average Price

When you buy shares of the same stock at different prices over time (dollar-cost averaging), calculating the weighted average price helps you know your true cost basis.

Weighted Average Price Formula

Average Price = Total Investment / Total Shares

Where:

Total Investment = Sum of (price × quantity) for each purchase
Total Shares = Sum of all shares purchased

Step-by-Step:

1
List all purchases
Record the price and quantity for each buy transaction.
2
Calculate total investment
Multiply price × quantity for each purchase and sum them.
3
Count total shares
Sum all quantities purchased.
4
Divide
Total investment / Total shares = Average price.

Worked Examples:

Three purchases of same stock

Buy 1: 100 shares @ ₹500Buy 2: 50 shares @ ₹400Buy 3: 150 shares @ ₹600

Result: Average = ₹533.33

Total = (100×500 + 50×400 + 150×600) = ₹1,60,000. Shares = 300. Avg = 533.33