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.
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.