Average Cost Calculator for PSX Shares: Averaging Down

What is average cost?

When you buy the same share more than once at different prices, your average cost is the total amount paid divided by the total number of shares. It decides whether you are in profit or loss and the price you need to sell at to break even. The calculator takes up to six purchases, shows your average, the value at today's price, the break-even price after trading charges, and how many more shares at today's price would bring your average down to a target.

Formula

Average cost = (Shares₁ × Price₁ + Shares₂ × Price₂ + …) / Total shares.
To reach a target average T by buying at today's price P, the shares needed are Current shares × (Average − T) / (T − P), which only works when today's price is below the target.

Example: averaging down

You bought 1,000 shares at Rs 120 and 500 more at Rs 95. You hold 1,500 shares for Rs 167,500, an average of Rs 111.67. The price is now Rs 90. To bring your average down to Rs 100 you would need 1,500 × (111.67 − 100) / (100 − 90) = 1,750 more shares, costing Rs 157,500. Your loss today is Rs 32,500 on paper; after the extra purchase, a rise back to Rs 100 would bring you to break-even before charges.

Averaging down: use it with care

• Averaging down only helps if the company is sound and the fall is temporary. Check the latest results, debt and the reason for the fall first.
• It raises your exposure to one stock. Decide in advance the most you will hold in a single company.
• Averaging up (buying more as the price rises) raises your average but adds to a position that is working.
• Bonus shares lower your average cost automatically, because you get more shares for the same money; right shares change it by the subscription price.

Charges matter

Brokerage, sales tax and exchange fees add roughly 0.15% to 0.3% on each side of a trade, so your real break-even is a little above your average cost. Work out the exact amount with the PSX trading charges calculator, and the tax on a profitable sale with the capital gains tax calculator.

Related: dividend calculator, CAGR calculator, and all calculators.

The calculator runs in your browser and nothing you type is saved or sent anywhere. Results are estimates for planning and education, not investment, tax or religious advice.

Frequently asked questions

How do I calculate the average price of shares?

Add up the amount paid for every purchase and divide by the total number of shares you hold.

How many shares do I need to buy to average down?

Current shares times (current average minus target average), divided by (target average minus today's price). The target must be between today's price and your average.

Is averaging down a good strategy?

Only when the business is sound and the fall is temporary. Averaging down into a company with falling profits or rising debt can deepen losses.

Do bonus shares change my average cost?

Yes. A bonus issue gives more shares for the same total cost, so the average cost per share falls in proportion.

Does the break-even price include charges?

Yes. The calculator adds the charges you enter on both the purchase and the sale.