.stock-calculator-container {
font-family: sans-serif;
border: 1px solid #ddd;
padding: 20px;
border-radius: 8px;
max-width: 500px;
margin: 20px auto;
background-color: #f9f9f9;
}
.stock-calculator-container h2 {
text-align: center;
margin-bottom: 20px;
color: #333;
}
.calculator-inputs {
display: grid;
grid-template-columns: 1fr;
gap: 15px;
}
.input-group {
display: flex;
flex-direction: column;
}
.input-group label {
margin-bottom: 5px;
font-weight: bold;
color: #555;
}
.input-group input {
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 1rem;
}
.stock-calculator-container button {
display: block;
width: 100%;
padding: 12px;
background-color: #007bff;
color: white;
border: none;
border-radius: 4px;
font-size: 1.1rem;
cursor: pointer;
margin-top: 20px;
transition: background-color 0.3s ease;
}
.stock-calculator-container button:hover {
background-color: #0056b3;
}
.calculator-result {
margin-top: 20px;
padding: 15px;
border: 1px solid #e0e0e0;
border-radius: 4px;
background-color: #fff;
text-align: center;
font-size: 1.1rem;
color: #333;
}
.calculator-result p {
margin: 5px 0;
}
.calculator-result strong {
color: #007bff;
}
function calculateAverageDown() {
var currentPrice = parseFloat(document.getElementById("currentPrice").value);
var quantityOwned = parseFloat(document.getElementById("quantityOwned").value);
var newPrice = parseFloat(document.getElementById("newPrice").value);
var newQuantity = parseFloat(document.getElementById("newQuantity").value);
var commission = parseFloat(document.getElementById("commission").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(currentPrice) || isNaN(quantityOwned) || isNaN(newPrice) || isNaN(newQuantity)) {
resultDiv.innerHTML = "Please enter valid numbers for all required fields.";
return;
}
if (quantityOwned < 0 || newQuantity < 0 || currentPrice <= 0 || newPrice <= 0) {
resultDiv.innerHTML = "Quantities cannot be negative, and prices must be positive.";
return;
}
// Handle optional commission
var effectiveCommission = isNaN(commission) || commission < 0 ? 0 : commission;
// Calculate total cost of existing shares
var existingCost = currentPrice * quantityOwned;
// Calculate total cost of new shares
var newCost = newPrice * newQuantity;
// Calculate total quantity
var totalQuantity = quantityOwned + newQuantity;
// Calculate total investment value including commissions for both trades
var totalInvestment = existingCost + newCost + (2 * effectiveCommission); // Assuming commission for initial purchase and current holding if applicable, or simply for the new purchase twice if initial commission was already factored in. For simplicity here, we consider commission for *both* the existing and new purchase. If the user only pays commission on the *new* purchase, adjust this line. A more accurate calculation might be: var totalInvestment = existingCost + newCost + effectiveCommission; if initial purchase commission is sunk. For this calculator, we'll assume commission is paid on *all* transactions being considered for the average down strategy.
// Calculate the new average price per share
var newAveragePrice = totalInvestment / totalQuantity;
// Calculate total value of all shares at the new average price
var totalValueAtNewAverage = newAveragePrice * totalQuantity;
// Calculate the change in value if sold at current price vs. new average price
var currentTotalValue = currentPrice * totalQuantity;
var valueDifference = currentTotalValue – totalValueAtNewAverage;
resultDiv.innerHTML =
"Initial Investment: " + (existingCost + effectiveCommission).toFixed(2) + "" +
"New Investment: " + (newCost + effectiveCommission).toFixed(2) + "" +
"Total Quantity: " + totalQuantity.toFixed(0) + "" +
"New Average Purchase Price: " + newAveragePrice.toFixed(2) + "" +
"Total Value of All Shares at New Average Price: " + totalValueAtNewAverage.toFixed(2) + "" +
"Total Value if Sold at Current Price (" + currentPrice.toFixed(2) + "): " + currentTotalValue.toFixed(2) + "" +
"Potential Gain/Loss (vs. new average): " + valueDifference.toFixed(2) + "";
}
Understanding Average Down Strategy
Averaging down is an investment strategy where an investor buys more shares of a stock as its price falls. The goal is to lower the average cost basis per share, meaning that when the stock price eventually recovers, the investor can achieve profitability with a smaller price increase than if they hadn't averaged down.
How it Works
Let's say you initially bought 100 shares of a stock at $50 per share, for a total investment of $5,000. If the stock price drops to $45, and you decide to average down by buying another 200 shares at this new price, your additional investment would be $45 * 200 = $9,000.
After this purchase, you would own a total of 100 + 200 = 300 shares. Your total investment would be $5,000 (initial) + $9,000 (new) = $14,000. To find your new average cost per share, you divide the total investment by the total number of shares: $14,000 / 300 shares = approximately $46.67 per share. This is your new average cost basis.
Now, if the stock price rises to $50, you would have a gain because your average cost basis is $46.67. If you had not averaged down, and the stock price recovered to $50, you would only break even. Averaging down allows you to potentially achieve profitability sooner on a price rebound.
Important Considerations
Risk Management: Averaging down can be a risky strategy if the stock price continues to fall. It's crucial to only average down on fundamentally sound companies whose stock price decline is temporary and not indicative of long-term business problems.
Capital Allocation: Ensure you have sufficient capital to average down without over-allocating your portfolio to a single declining stock.
Market Conditions: Consider broader market trends and sector performance. Is the decline a result of company-specific issues or a general market downturn?
Commissions and Fees: Remember to factor in trading commissions and fees for both your initial purchase and any subsequent purchases when calculating your true average cost. This calculator includes an optional field for this.
Example Calculation
Using the calculator above:
Current Stock Price: $50.00
Quantity Currently Owned: 100
Price of New Purchase: $45.00
Quantity of New Purchase: 200
Commission/Fees (optional): $5.00
The calculator will output your new average purchase price, total quantity, and the total value of your holdings at the new average price, as well as the potential gain or loss if sold at the current market price.