Averaging down: math, not hope
Averaging down lowers your average entry — but it also grows your position and your risk. The new average is just total money in ÷ total coins. Use it to see your real break-even after adding, then size the add with the position size calculator and check the new liquidation price. If you're rescuing a losing trade, read the DCA survival calculator first — averaging into a falling knife is how accounts die.
FAQ
How do I calculate my average entry after buying more? New average = total cost ÷ total coins. Add the cost of your first buy (price1 × amount1) to the cost of the new buy (price2 × amount2), then divide by the total number of coins. This calculator does it and shows how far your break-even drops.
Does averaging down reduce my break-even? Yes — buying more at a lower price pulls your average entry down, so price needs to recover less for you to break even. But it also increases your position size and risk, so size it against your account, not your emotions.
Averaging down changes your break-even, not the asset's direction
Buy $500 at $100. Price drops to $70. Buy another $500. New average: $1,000 total ÷ 12.14 units = $82.37. Your break-even dropped from $100 to $82.37. That's the math. What it doesn't change: why the price went to $70 in the first place.
Averaging down works well when the asset is fundamentally sound and the dip is external (market-wide fear, temporary liquidity crunch). It works badly when you're buying into a broken project, a delisting, or a trend reversal. The formula doesn't know the difference — you have to.
For leveraged futures, averaging down by adding to a losing position usually just raises your liquidation price risk. Every additional buy requires more margin. Unlike spot, you can liquidate before you get to average down.
Related: DCA calculator, weighted average entry, drawdown recovery time.