Dollar-Cost Averaging vs Weighted Average Price
Learn how recurring investments and weighted cost basis are calculated for stock and crypto purchases.
The concept in plain English
A DCA calculator projects how recurring investments may accumulate over time, while an average price calculator combines multiple purchases into one weighted cost basis. Both use the actual amount invested rather than a simple average of prices.
Open DCA & Average Price CalculatorSeparate a savings plan from a price forecast
Projection mode asks a hypothetical question: what happens if contributions arrive on schedule and the assumed return persists? Average-price mode answers a bookkeeping question using purchases already made. Do not interpret the projection as a historical backtest, and do not treat a lower cost basis as proof that the investment improved. Review contribution affordability and concentration independently. Contributions in the projection occur at the end of each period.
Equal dollars do not buy equal units
Two purchases: $200 at $50 per unit and $200 at $40 per unit. Purchase fees are excluded.
$200 ÷ $50 = 4 units. $200 ÷ $40 = 5 units. $400 ÷ 9 = $44.4444 per unit.
9 units at a weighted average of about $44.44, not the $45 simple average of the two prices.
A fixed cash contribution buys more units at the lower price. This changes the cost basis, but it does not guarantee a positive return.
Calculation method
Projection mode converts the assumed effective annual return after annual fee drag to a periodic rate. Contributions arrive at each completed period-end; a partial final period earns growth but adds no extra contribution. Weighted average price equals total purchase cost divided by total units acquired.
| Input | Purpose |
|---|---|
| Initial investment | Starting capital in the recurring plan. |
| Contribution schedule | Amount and frequency of future purchases. |
| Return and fees | Hypothetical annual growth after costs. |
| Purchase lots | Price and amount for weighted average cost. |
Step-by-step workflow
- Choose projection mode for future contributions or average-price mode for past buys.
- Enter the contribution schedule and assumptions, or add each purchase lot.
- Review projected capital, growth and cost basis before changing an investment plan.
Practical benefits
- Shows the effect of consistent contributions over time.
- Calculates a true unit-weighted average purchase price.
- Keeps all inputs private in the browser.
Questions about DCA & Average Price Calculator
Is DCA the same as averaging down?
No. DCA follows a recurring schedule regardless of price. Averaging down specifically adds capital after price has fallen and changes concentration risk.
How is weighted average price calculated?
Add the cost of every purchase, add the units acquired, then divide total cost by total units. Larger purchases therefore have more influence.
Does DCA guarantee a profit?
No. DCA changes entry timing but cannot prevent losses if the asset declines or fails. Asset quality, fees and time horizon still matter.
Sources and further reading
Examples are hypothetical and exclude costs unless stated. This is educational material, not individualized investment or tax advice. Read our methodology and risk disclosure.