Your average cost is the single price that represents your whole position. If you buy in pieces at different prices, your average is the blended price of everything you own. It is the number that decides whether you are up or down.
Here is the simple math. Buy $100 at $2 and $100 at $1, and you have spent $200 for 150 tokens. Your average is $200 divided by 150, about $1.33. The moment price is above $1.33, your whole position is green.
This is why the entry price of your first buy matters less than people think. What matters is where your average lands after all your buys. A calm buyer aims for a low, comfortable average, not a perfect first entry.
Your average cost is your break-even line. You are green when price is above it, red when below, no matter what any single buy cost.
Tip. Adding lower drops your average and pulls your break-even down toward you. Adding higher raises it and pushes break-even away. Always know which one a buy is doing.