How to Calculate Average Entry Price
When you buy an asset across multiple orders at different prices, your effective entry price is a weighted average — weighted by the quantity of each order.
Average Entry = Total Cost / Total Quantity
Total Cost = Σ (Price × Quantity) for each orderExample: Buying BTC across 3 orders:
Order 1: 0.1 BTC at $70,000 = $7,000
Order 2: 0.2 BTC at $62,000 = $12,400
Order 3: 0.1 BTC at $55,000 = $5,500
Total Cost = $24,900 | Total Qty = 0.4 BTC
Average Entry = $24,900 / 0.4 = $62,250When DCA Works — and When It Doesn't
DCA works well when you have a long-term conviction on an asset and are buying systematically over time. It reduces the impact of short-term volatility on your entry price.
DCA fails when used as an emotional response to a losing trade without a plan. Averaging into a position that continues to fall compounds your losses — you end up holding more of something that keeps dropping. Always define a maximum loss and a stop-loss level before adding to any position.