Finds the average cost of something bought in two lots, as the total paid ÷ the total quantity. Buying more at a lower price pulls the average down, but what falls is the average, not the loss.
This finds what a unit effectively cost when the same thing was bought in two lots.
It is not the two prices added and halved. The answer leans towards the price at which more was bought: it is a mean weighted by quantity.
Buy 100 units at 2000 and 200 at 1400. The total paid is across 300 units, so the average cost is 1600, not the 1700 that averaging 2000 and 1400 would give. Twice as much was bought at the lower price, so the average leans that way.
At a current price of 1500 the holding is worth 450,000, a loss of 30,000. Breaking even needs a rise of 6.67% from the current 1500.
Buying more at a lower price does pull the average cost down. What has fallen, though, is the average per unit, not the loss being carried. With more units held, the swing in value for a given move in price is larger than before.
Fees and tax are not included. The real cost per unit is higher by that much.