Stock Average Calculator
How do you calculate your average purchase price and net profit when you buy a stock for ₹500 and then purchase more shares for ₹400 as the prices decrease?
Some new investors mix up the stock average with the simple arithmetic average. The right way to do it is to use a weighted average, which takes into account the number of items bought at each price level, not just the prices themselves.
What is a Stock Average Calculator?
A stock average calculator is an online tool that figures out the weighted average price of stocks bought in several transactions.
You give these inputs:
Number of Shares: The number of shares bought in each transaction
Price of Purchase: Price per share for each transaction
The calculator gives:
Average Price: The average price per share, weighted by how many shares you own
Total Shares: All of the shares you own
Total Investment: The total amount spent
Keep in mind that the average price is what you actually paid for the asset when figuring out capital gains. The calculator doesn't take into account taxes or brokerage fees, which change the real cost.
How can a Stock Average Calculator help you?
Breakeven Point Identification: Know the exact price at which you break even when you sell so you don't make decisions based on wrong assumptions about the entry price.
Averaging Strategy Planning: Figure out how buying more shares at higher or lower prices affects your average cost and profit goals.
Portfolio Tracking: Monitor your actual gains or losses by contrasting the market price with the weighted average cost.
How do Stock Average Calculators work?
The formula is:
Average Price = Total Investment ÷ Total Shares
Where:
Total Investment: All the money spent on purchases
Total Shares: Total number of shares bought
Sample Calculation
Three transactions were done:
Transaction 1 - ₹250 for 100 shares
Transaction 2 - 200 shares for ₹275
Transaction 3 - ₹240 for 150 shares
Step 1: Figure out how much you want to invest:
(100 × ₹250) + (200 × ₹275) + (150 × ₹240)
₹25,000 + ₹55,000 + ₹36,000 = ₹1,16,000
Step 2: Find out how many shares there are: 100 + 200 + 150 = 450 shares
Step 3: Find the average price: ₹1,16,000 ÷ 450 = ₹257.78 per share
It's wrong to just average the prices (₹250 + ₹275 + ₹240) ÷ 3 = ₹255. This doesn't take into account that you bought different amounts at each price.
The right breakeven point is ₹257.78, not ₹255. Selling at ₹260 makes a profit of ₹2.22 per share, or ₹999 total, not ₹5 per share.
How to use Stockify's Stock Average Calculator?
Follow these steps to use Stock Average Calculator:
1. Type in the first purchase
Enter the number of shares and the price for your first trade.
2. Add More Purchases
For each extra purchase, type in the amount and price.
3. Press "Calculate"
Calculate the total investment and the weighted average price right away.
4. Look at the results
Look at the average cost per share and see how it compares to the current market price.
Advantages of using Stockify's Stock Average Calculator
Accurate Cost Basis:
Automatically calculate the weighted average across transactions to avoid mistakes in manual calculations.
Quick Decisions:
You can see right away how extra purchases affect your average cost, which helps you make better trading decisions.
Tax Support:
Gives you the right cost basis to figure out how much capital gains tax you owe.
Testing Strategies:
Look at different ways to average things before making trades.
FAQ
A Stock Average Calculator finds the weighted average price of stocks bought in several transactions at different prices. To find out how much each share really costs you and how much you need to sell it for to break even, enter the quantity and price for each purchase.
The weighted average formula for stock average is Average Price = [(P₁ × Q₁) + (P₂ × Q₂) + ... + (Pₙ × Qₙ)] / (Q₁ + Q₂ + ... + Qₙ), where P is the price of the purchase and Q is the number of items in each transaction. This takes into account both price and volume.
The weighted average takes into account how many items were bought at each price. Your average cost is ₹191 (weighted), not ₹150 (simple average), if you buy 10 shares for ₹100 and 90 shares for ₹200. The weighted average shows how the investments are actually spread out.
When you average down, you buy more shares after the price goes down, which lowers your average cost per share. For example, if you buy 100 shares at ₹300 and then 100 more at ₹200, the average price goes down to ₹250, which lowers the breakeven price.
If the fundamentals of the stock stay strong and the decline is only temporary, averaging down works. It's dangerous if the stock keeps going down because business is getting worse. You should only average down on good stocks that you believe will do well in the long run.
There is no limit, but you should make rules to keep your risk in check. Disciplined investors only average down two or three times or limit their extra investments to a certain percentage of their portfolio to avoid being too exposed to assets that are losing value.
Yes, for an accurate cost basis, you should add up the total investment, which should include brokerage fees, STT, GST, and transaction fees. This gives you the real average cost and the exact profit or loss. Most calculators show averages before costs, so add fees by hand.
When the price goes up, averaging up means buying more shares. Used when the stock is moving quickly. It puts more money into stocks that have already proven to be winners, which raises the average cost.
The average price (cost basis) is what decides how much capital gains tax you owe. Profit = (Selling Price - Average Cost) × Shares. Long-term capital gains (held for more than 12 months) are taxed at 12.5% on gains over ₹1.25 lakh. STCG (held for less than 12 months) is taxed at 20%.
The calculation for profit percentage = [(Current Price - Average Cost) / Average Cost] × 100. The average cost is ₹257.78, and the current price is ₹300. The profit is [(300 - 257.78) / 257.78] × 100 = 16.38%.
Buy/Sell Your Unlisted Shares
Submit the details below to share a quote.
