# Average cost

> Average cost is what you paid per unit, across every purchase. It is the number to compare against the current price to see where a position stands.

Average cost is your [cost basis](/concepts/cost-basis) divided by the number of
units you hold. It is the per-unit version of what you paid.

```
average cost = cost basis / quantity
```

Its usefulness is that it sits on the same scale as the price column. Price
above average cost means the position is up. Below means it is down. That
comparison is the fastest read in the holdings table.

## Why it moves

Average cost changes whenever you buy at a price different from your current
average. Buying above it pulls it up, buying below pulls it down. Selling does
not change it: a sell reduces the cost basis and the quantity proportionally,
leaving the ratio where it was.

Stock splits do change it, and sharply. A two for one split doubles your
quantity while your cost basis stays the same, so average cost halves. Nothing
about your position's worth has changed. The number simply now refers to twice
as many, smaller units.

This is worth knowing because a split applied to your history after the fact
will restate the average cost of every affected position. That is the
correction working, not a data error.

## What it is not

Average cost is not a target, and it is not a decision rule. A position trading
below your average cost tells you what happened, not what to do about it.
Gylder does not flag positions as being under water, and does not suggest
acting on the comparison.

It is also blind to time. Two positions at the same average cost, one bought
last month and one held for a decade, look identical in this column. For that
dimension, see [holding period](/concepts/holding-period), and for a return
figure that accounts for when you invested, see
[time-weighted vs money-weighted return](/concepts/time-weighted-vs-money-weighted-return).