Stock Average & Return
Average buy price and return rate.
| Buy price (KRW) | Quantity | |
|---|---|---|
Average buy price
47,500원
Estimate only. Brokerage fees and transaction taxes are not reflected.
What is the average buy price
The average buy price (cost basis) is the weighted average price of shares bought across multiple purchases at different prices. Since each purchase may happen at a different price, dividing total cost by total shares gives your true average entry cost.
How it's calculated
Given purchases (price₁, qty₁), (price₂, qty₂), …: average price = Σ(price×qty) ÷ Σqty; total buy amount = Σ(price×qty); total quantity = Σqty. If a current price is entered, unrealized P/L = (current price − average price) × total quantity, and return rate (%) = (current price − average price) ÷ average price × 100.
Averaging down and up
Buying more shares after a price drop to lower your average cost is called averaging down; buying more as the price rises is averaging up. Both strategies should be weighed carefully against your average price and total capital invested.
Averaging down: the arithmetic and what it hides
Buying more lowers the average price as a matter of arithmetic, not because the loss shrank. A lower average and a better position are separate claims.
How the average is formed
The average is total cost divided by total quantity — a quantity-weighted mean, not a simple average of prices, so it leans toward whichever price you bought most at.
Adding a small quantity at a low price therefore barely moves it. Shifting the average meaningfully takes a purchase comparable to the existing holding, which raises both the amount committed and the risk.
The break-even price is the average plus trading costs: brokerage on each side, and securities transaction tax on domestic sales. Omit these and a position still down can look level.
Where averaging down turns risky
Adding shares concentrates the position. If the judgment is right the recovery is faster; if wrong, a larger loss sits in one place — lost diversification is the price of a lower average.
Whether the fall came from the market as a whole or from the company's earnings and balance sheet changes the answer. In the latter case the lower price is not cheap; it has a reason.
What you already paid does not affect future returns. Asking whether you would buy at today's price is more useful than asking whether it lowers the average, and treating the average as a recovery target makes it easy to hold past the point of selling.
What belongs in the calculation
For overseas stocks the exchange rate works alongside the price: a rise can shrink in won terms if the rate falls, and the reverse also happens — decide whether the average is tracked in won or in the foreign currency.
Dividends received effectively reduce the cost basis, though withholding tax means the after-tax figure is the relevant one.
Gains on overseas shares are subject to capital gains tax above the basic deduction, with gains and losses offset across holdings. Domestic shares generally avoid capital gains tax outside the major-shareholder rules but carry securities transaction tax on sale.
Legal basis
- Securities transaction tax — Securities Transaction Tax Act
- Capital gains tax and basic deduction on overseas shares — Income Tax Act
- Dividend withholding — Income Tax Act
- Brokerage commission — per securities firm's terms