DSE Average Down Calculator

What is Averaging Down in the Stock Market?

Averaging down is a strategy used by investors on the Dhaka Stock Exchange where they buy more shares of a stock they already own after the price has dropped. By purchasing additional shares at a lower price, the overall weighted average cost of the position is reduced.

If the stock eventually recovers, this strategy allows the investor to reach a break-even point faster or generate higher profits than if they had only made the initial purchase.

When should you Average Down?

Averaging down can be a powerful tool, but it should only be used under certain conditions in the Bangladesh market:

• Strong Fundamentals: Only average down on companies with solid earnings, good management, and a clear business future (A-category stocks).
• Temporary Setback: Ensure the price drop is due to market sentiment or temporary issues, not a permanent decline in the business model.
• Position Sizing: Do not over-allocate to a single stock. Even when averaging down, maintain a diversified portfolio across sectors like Banking, Pharma, and Textiles.

Calculating the Weighted Average

The formula for weighted average price is:
Avg Price = (Total Cost of All Purchases) / (Total Number of Shares)

Our calculator handles this automatically, allowing you to add unlimited entries to see exactly how your break-even price changes with each new purchase.