Average Entry & Add-Ons
A better average entry and a safer position are not the same thing. See both.
Position
Standard model — flat maintenance margin rate.
Planned add-ons
Assumptions (all editable)
After the add-on
E3 · Modelled Estimate
| Before | After |
|---|
Calculation and assumptions
Educational tool, not investment advice.
A worked example
A long at $60,000 that adds the same size again at $57,000. The average improves either way — what happens to the liquidation buffer depends entirely on how the add-on is funded.
What goes in
- Existing position
- 0.1 BTC long at $60,000, 10x
- Add-on
- 0.1 BTC at $57,000, filled
- New average entry
- $58,500
- Total quantity
- 0.2 BTC
What comes out
- Margin at same leverage
- $1,170 · effective 10.00x · liquidation $52,941 · buffer 9.50%
- No new margin
- $600 · effective 19.50x · liquidation $55,807 · buffer 4.60%
- Average entry, both cases
- $58,500
- Buffer change, funded
- unchanged
- Buffer change, unfunded
- cut roughly in half
Both rows have the identical average entry, and that is the number people look at. It always improves when you add below a long — that is arithmetic, and it is also why adding down feels like progress.
The liquidation buffer is a separate question with a different answer. Post margin for the new size at the same leverage and the buffer percentage holds at 9.50%. Add the size without committing new margin and the same $600 is now carrying twice the position: effective leverage goes to 19.50x and the room before liquidation falls to 4.60%.
That second row is what averaging down usually means in practice. The average entry improved and the position got roughly twice as fragile, at the same time, from the same action, which is why the two are reported as separate results rather than blended into one verdict.
What each field means
- Current entry and quantity
- The position as it stands. If it was itself built from several fills, use the weighted average — the PnL tool computes the same figure.
- Add-on legs
- Up to ten planned entries. Each has a Filled tick: leave it unticked for a limit order that has not filled, and it changes nothing. A plan is not a position.
- How the add-on is funded
- The choice that decides everything. Margin at the same leverage keeps the buffer percentage; no new margin raises effective leverage and shrinks it.
- Extra margin deposited
- Margin added alongside the position. This is the only input that buys back liquidation room.
- Effective leverage
- Notional divided by the margin actually backing it. It is what your position behaves like, regardless of the leverage setting on the order ticket.
Common questions
Does averaging down reduce my risk?
It reduces your average entry, which is not the same thing. Whether risk falls depends on the margin: fund the larger position properly and the buffer percentage holds, add without new margin and the buffer shrinks while the position doubles. The tool shows both numbers because the second one is the one that decides whether the position survives.
Why did my liquidation price move after adding?
Because it is re-solved from the new average entry, the new quantity and the new margin — three things that all changed. It is never carried over from before the add-on. Adding below a long pulls the average down and the liquidation price down with it, but whether that is more room in percentage terms depends on the funding.
What is effective leverage?
The notional divided by the margin actually behind it. Open at 10x, double the size without adding margin, and the order ticket may still say 10x while the position behaves like 19.5x. Effective leverage is the honest number.
Does adding to the position change the maintenance margin tier?
Exchanges raise the maintenance margin rate as a position grows, and adding size is exactly when a position crosses into a higher tier — which brings liquidation closer than a flat-rate model shows. Look up the tier your new size falls in and set that rate in the assumptions before relying on the figure.
Should the add-on legs be at prices I plan or prices I got?
Either, as long as the Filled tick matches reality. Untick a leg to see what a plan would do without pretending it happened; tick it once it fills. Unfilled legs are shown for planning and excluded from every number.