Averaging down on stocks is often a knee-jerk response to an already-held price decline. Getting caught up in the hype of a rapidly moving market can cause us to lose track of our goals.
Curious, do you even calculate the break-even point when averaging down?
To meet our goals, we need to understand how we calculate the break-even point when averaging down stocks.
Let’s Keep This Simple and Calculate The Break-Even Point With Math.
There might be tools out there, but doing simple math can help you keep a rolling break-even point in your head when deciding whether or not to average down on your stocks.
Break-Even Point Math: Total Cost Of Shares/Shares = Price Per Share.
That’s it. Just divide how much you have invested(paid) in your pool of shares by the number of shares in your pool.
Tools: How Do We Calculate The Break-even Point When Averaging Down?
I find myself often catching falling knives more than once when I’m trying to average down. Sometimes by the handles, but more than often by the blade, resulting in more knife catching. If this didn’t make sense, it’s a play on stock jargon.
Basically, if I get myself into an ‘averaging down’ situation, I find myself over reacting more often by making more purchases. Calculating a break-even point in this situation can be rough, but with tools it’s easier.
Early on, I used spreadsheets; this way, I can later calculate which stock block gets cashed out, but since I am now buying and holding my stocks and ETFs, I generally use the brokerage house app or program to keep track of my break-even point.
What Do You Use?
 Myself with an interesting Bull Sculpture. Notice: No Lambo’s. :/ | Hi I’m Tom, A Blogger And A PIG Farmer. PIG Farmer as in I grow Passive Income Generators(PIG’s). I’ve been playing with stocks, mutual funds, and options for decades, as well as always working on my side hustle stacks. Unlike what you read online, I’ve yet to find a way to get rich quickly. Get Rich Quick isn’t happening for me. My journey has been long and continues. I hope to have so many PIGs I can stop working at my current job and volunteer as a medical worker overseas. Still waiting, but getting there. I still am a family man, and while on this Journey of Growing PIGs. I wanted to share my adventures(ups and downs), hoping you will contribute with your feedback and comments. Fun Fact: In my spare time, I am a Band-Dad! |