Let's say you bought some stock , then the price dropped . If you are confident that it's a good company with a great product and will pull out of the slump and soar up in value , now , while the cost is less , might be a better time to buy more . Just for convinence , let's say you bought equal number of shares at two different prices . How can you tell when you can make a profit when you sell ? If you're lucky , you may wait and the new price will go higher than the highest price you paid for your stock , that one's easy . But let's say you want to sell earlier than buy even more when the price drops again . Log onto your broker's software and call up your purchase information . Look under cost basis . Make sure you have the account you invested in that particular stock . Then look at cost gain/loss . This will combine the two different purchases into one with the average price , and let you know if the current selling price is above your combined average cost .