diff --git a/service/server/services.py b/service/server/services.py
index 084c994..6e0d434 100644
--- a/service/server/services.py
+++ b/service/server/services.py
@@ -233,10 +233,14 @@ def _update_position_from_signal(
         if current_qty < 0:
             # Add to existing short
             new_qty = current_qty - quantity
+            current_short_qty = abs(current_qty)
+            new_entry_price = (
+                (current_short_qty * row["entry_price"]) + (quantity * price)
+            ) / abs(new_qty)
             cursor.execute("""
-                UPDATE positions SET quantity = ?, opened_at = ?
+                UPDATE positions SET quantity = ?, entry_price = ?, opened_at = ?
                 WHERE id = ?
-            """, (new_qty, executed_at, position_id))
+            """, (new_qty, new_entry_price, executed_at, position_id))
             print(f"[Position] {symbol}: increased short position to {new_qty}")
         else:
             # Create new short position (negative quantity for short)
diff --git a/service/server/tests/test_services.py b/service/server/tests/test_services.py
new file mode 100644
index 0000000..2691aff
--- /dev/null
+++ b/service/server/tests/test_services.py
@@ -0,0 +1,91 @@
+import sqlite3
+import sys
+import unittest
+from pathlib import Path
+
+
+SERVER_DIR = Path(__file__).resolve().parents[1]
+if str(SERVER_DIR) not in sys.path:
+    sys.path.insert(0, str(SERVER_DIR))
+
+from services import _update_position_from_signal
+
+
+class UpdatePositionFromSignalTests(unittest.TestCase):
+    def setUp(self) -> None:
+        self.conn = sqlite3.connect(":memory:")
+        self.conn.row_factory = sqlite3.Row
+        self.cursor = self.conn.cursor()
+        self.cursor.execute(
+            """
+            CREATE TABLE positions (
+                id INTEGER PRIMARY KEY AUTOINCREMENT,
+                agent_id INTEGER NOT NULL,
+                leader_id INTEGER,
+                symbol TEXT NOT NULL,
+                market TEXT NOT NULL DEFAULT 'us-stock',
+                token_id TEXT,
+                outcome TEXT,
+                side TEXT NOT NULL,
+                quantity REAL NOT NULL,
+                entry_price REAL NOT NULL,
+                current_price REAL,
+                opened_at TEXT NOT NULL
+            )
+            """
+        )
+
+    def tearDown(self) -> None:
+        self.conn.close()
+
+    def test_short_add_updates_weighted_entry_price(self) -> None:
+        self.cursor.execute(
+            """
+            INSERT INTO positions (
+                agent_id, leader_id, symbol, market, token_id, outcome,
+                side, quantity, entry_price, opened_at
+            ) VALUES (?, ?, ?, ?, ?, ?, ?, ?, ?, ?)
+            """,
+            (
+                1,
+                None,
+                "BTC",
+                "crypto",
+                None,
+                None,
+                "short",
+                -0.2,
+                100.0,
+                "2026-04-13T14:16:45Z",
+            ),
+        )
+
+        _update_position_from_signal(
+            agent_id=1,
+            symbol="BTC",
+            market="crypto",
+            action="short",
+            quantity=0.3,
+            price=120.0,
+            executed_at="2026-04-13T15:16:45Z",
+            cursor=self.cursor,
+        )
+
+        self.cursor.execute(
+            """
+            SELECT quantity, entry_price, opened_at
+            FROM positions
+            WHERE agent_id = ? AND symbol = ? AND market = ?
+            """,
+            (1, "BTC", "crypto"),
+        )
+        row = self.cursor.fetchone()
+
+        self.assertIsNotNone(row)
+        self.assertAlmostEqual(row["quantity"], -0.5)
+        self.assertAlmostEqual(row["entry_price"], 112.0)
+        self.assertEqual(row["opened_at"], "2026-04-13T15:16:45Z")
+
+
+if __name__ == "__main__":
+    unittest.main()