Cost basis follows share-weighted purchases
Average cost per share is total purchase cost divided by total shares acquired. Each lot contributes its own shares times its own price, so a larger later purchase has more influence on the combined cost than a smaller earlier purchase.
Two lots produce a fifty-three-sixty average
The first lot is 100 shares at $62, or $6,200. The second is 150 shares at $48, or $7,200. Together $13,400 divided by 250 shares gives an average cost of $53.60 per share.
Only like shares belong in one average
This two-lot model assumes the shares are the same security and that neither lot has been sold. It also treats entered prices as complete costs; commissions, transfer fees, and currency conversion charges belong in the purchase total when material.
A lower basis is not a better investment thesis
Averaging down changes the cost basis, not the business prospects of the holding. Buying more merely because the quoted price is lower can increase concentration and loss exposure, so position size deserves a separate decision.
A recordkeeping reference, not a tax-lot election
Use this calculation to reconcile a simple combined position or set a break-even reference before a possible sale. It does not select tax lots or determine taxable gain when local rules require a specific identification method.
Corporate actions break the two-lot picture
Stock splits, spin-offs, dividend reinvestments, and partial sales change the share count or basis in ways this two-purchase illustration does not model. Keep trade confirmations and use an account statement when an official cost basis matters.
Why the midpoint is wrong
The average is a weighted average, not the midpoint between $62 and $48. Equal weighting would give $55, but the $48 lot contains more shares and therefore pulls the actual cost to $53.60. That distinction is important whenever purchases have unequal sizes; keep a lot table rather than averaging quoted prices by eye.
Break-even is not automatically an exit signal
A break-even price near the average cost may still not be an economic exit point after commissions, taxes, or the value of capital tied up in the position. Use the calculated average as a recordkeeping reference, then make a separate sell, hold, or diversify decision based on current information.
The weighted numerator keeps lot size visible
The calculation is (100 × $62 + 150 × $48) ÷ (100 + 150). The $7,200 second lot is larger than the $6,200 first lot, so its lower price has more influence. Dividing the two quoted prices by two gives $55, which would be correct only if both lots contained the same number of shares. The number of shares, not the number of trade tickets, supplies the weights.
Fees belong to total cost when they are paid
If the two purchases also carried $9.95 commissions, the all-in cost is $13,419.90 and the average is $53.6796 per share. Rounding that to $53.68 is appropriate for a planning view. Do not add a fee twice when a broker's reported lot cost already includes it, and do not assume every platform reports costs the same way. Trade confirmations identify the convention better than a quoted price alone.
A split changes units without creating a gain
In a two-for-one split, 250 shares become 500 and a $53.60 average becomes $26.80; the total $13,400 cost is unchanged. A simple two-lot form cannot infer a split, spin-off, merger election, return of capital, or partial sale. Those events can change reported basis in ways that should come from the broker record or official tax documentation rather than a reconstructed average.
Break-even is a reference, not a decision rule
If the current quote is $51, the $53.60 average shows an unrealized difference of $2.60 per share before selling costs. It does not tell an investor to buy, hold, or sell. A new purchase at a lower price reduces the average only by adding exposure, while a sale may be selected from a particular lot for tax purposes. Keep the arithmetic separate from the investment and tax decisions.
Partial sales require a lot convention
After selling 80 shares, the remaining basis depends on which lot was sold under the account's identification method. Leaving the original 250-share average unchanged is not a substitute for that record. The two-purchase calculation is most reliable before any sale, when all acquired shares remain in the combined position.
Currency conversion belongs in each lot
If one purchase was paid in another currency, convert its complete cost at the transaction's recorded rate before averaging. Converting the current average quote instead mixes a historical purchase cost with a current exchange rate. The tool assumes both entered prices share one currency and one unit of ownership.
Preserve the trade ledger
A single average is convenient, but its evidence is the list of lots: trade date, shares, price, commission, currency, and later corporate action. Keep that list even when the displayed average is sufficient for a planning discussion. Once lots are sold or adjusted, the original two-trade shortcut no longer describes the account history. A stored lot record lets the average be rebuilt after a split, fee correction, or partial sale. Reconcile the displayed share total with the broker before using an average as a break-even reference.