Definition
Total acquisition cost divided by total quantity. Unequal quantities make it different from a simple average of purchase prices.
Hypothetical example
Buying 10 at 100 and 5 at 80 gives 1,400 ÷ 15, about 93.33, before fees.
Keep in mind
Adding purchases can lower average cost while increasing total exposure. Tax cost-basis methods must be checked separately.
Official reference
www.fidelity.com ↗Examples are illustrative assumptions, not investment recommendations.