Quick Finance Tip - Averaging Down

Averaging Down  is when an investor will continue to purchase a stock, as price falls, in order to make their average purchase price smaller. 

The Quick Math:

1. Investor buys 100 shares at $20. 
2. Stock falls to $10.
3. Investor buys another 100 shares at $10. 
4. Average Price = (100 * 20) + (100 * 10) = $3000 / 200 shares = $15