Average Purchase Price

Simple explanation

Background: Korean investors call it 평단 (pyeongdan), short for "average unit price", and Korean exchange apps show it as 매수평균가 next to each holding. Two slang words travel with it: 물타기 ("adding water"), buying more as the price falls to pull the average down, and 불타기 ("adding fire"), buying more as it rises.

The sum is simple: add up what you paid and divide by the coins you hold. You cannot just average the prices, because the quantities matter. Buy 10 coins at ₩1,000 and 90 at ₩500, and the plain average of the two prices is ₩750, but your real average is (10,000 + 45,000) ÷ 100 = ₩550. Exchange apps compare this figure with the current price to show your paper profit or loss and your return (current price ÷ average price − 1).

Fees are part of the cost. The trading fee you paid on each buy makes your true cost per coin a little higher than the fee-free average, and you pay a fee again when you sell, so selling exactly at your average price loses the fees. To break even you need roughly average × (1 + buying fee rate) ÷ (1 − selling fee rate), and because prices move in tick sizes, the real break-even price can be one tick above that. Whether an exchange's displayed average includes fees can differ from one exchange to another, so check your exchange's own help pages; fee rates also vary by exchange, market and promotion, and they change.

Selling part of a holding usually leaves the average of the remaining coins unchanged; only the sold part's profit or loss is locked in (realized). Buying again blends the new price into the average, and selling everything and buying back starts a fresh one. Each exchange keeps its own figure. When coins arrive from another exchange or a personal wallet, the receiving exchange cannot know what you paid, so handling differs and the figure may not match your real cost. Some exchanges let you correct the average yourself; Upbit's public API even has an account field for whether the average buy price has been modified. If you hold the same coin on several exchanges, you have to work out the overall average yourself.

Averaging down means buying more of a coin that has fallen, so the average drops. It shrinks the rise you need to get back to break-even, but it does not shrink the loss you have right now: the new coins sit at their purchase price with no gain or loss, and the old loss is still there. What it does is put more money into the same coin, so if the price keeps falling the loss grows much faster. If something goes wrong with the coin itself, such as an investment warning or a delisting, and the price never recovers, the money added on the way down is lost with the rest. Averaging down every time a loss appears, with no plan, is not the same as dollar-cost averaging, where the amount and number of buys are fixed in advance.

Averaging up is the opposite: buying more of a coin that has risen. It raises the average, and the larger holding earns more on any further rise, but the gap between your average and the market price narrows, so a small pullback can turn the whole position into a loss. Buy 100 coins at ₩1,000, then 100 more at ₩1,500, and your average becomes (100,000 + 150,000) ÷ 200 = ₩1,250; below ₩1,250 the gain on your first 100 coins is gone too.

A coin bought on a Korean exchange carries the kimchi premium of the moment inside its average. If the overseas price stays put but the premium shrinks, the Korean price falls and you show a paper loss: buy at a +5% premium, and if only the premium drops to 0%, you are at 1 ÷ 1.05 − 1 = about −4.76%. The won-dollar rate moves the won value of overseas prices too, and with it Korean prices. Coins bought when premiums run to tens of percent, as often happens right after a listing, can lose heavily on the premium alone. Asking "how much above the overseas price did I pay?" makes it easier to see where a profit or loss came from.

Your average price is only a record of what you paid; it says nothing about where the price goes next. The market does not know your average, so there is no reason for the price to hold or bounce near it. Many losses grow because people put off a stop-loss or keep averaging down while waiting to get back to even, so the average is best treated as a yardstick for profit and loss rather than a reason to buy or sell.

CoinGaja does not show anyone's personal average price. Its Kimchi premium by coin table and each coin's own page (for example /premium/BTC) show the coin's price on the four Korean exchanges and on Binance with the premium on each exchange, so you can see how much premium is built into the Korean price, which is how much premium a purchase right now would add to your average. The CoinGaja Kimchi Premium Index chart shows whether the market-wide premium is high or low at the moment.

Example

※ Example numbers, for illustration only

See it on CoinGaja

• 📊 Kimchi premium by coin›
• 📈 CoinGaja Kimchi Premium Index›
• 🧮 How CoinGaja calculates the premium›

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