Adjusted Debit Balance

AAA

DEFINITION of 'Adjusted Debit Balance'

The amount in a margin account that is owed to the broker, minus profits on short sales and balances in a special miscellaneous account (SMA). The adjusted debit balance aids an investor in knowing how much he/she owes in the event of a margin call. Under Regulation T, one can borrow up to 50% of the purchase price of securities on margin.

INVESTOPEDIA EXPLAINS 'Adjusted Debit Balance'

Regulation T guidelines changed in 1982, making it less significant than in years past. However, the formula is still useful in determining the amount of money or securities that one can withdraw from a margin account. For example, things like "freeriding," a practice whereby a stock is bought and sold before it has been paid for, is not permitted. If/when freeriding occurs, the broker is obligated to freeze the investor's ability to buy on margin for 90 days.

RELATED TERMS
  1. Special Memorandum Account - SMA

    A special account where excess margin generated from a client's ...
  2. Initial Margin

    The percentage of the purchase price of securities (that can ...
  3. Margin

    1. Borrowed money that is used to purchase securities. This practice ...
  4. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin ...
  5. Margin Call

    A broker's demand on an investor using margin to deposit additional ...
  6. Margin Account

    A brokerage account in which the broker lends the customer cash ...
Related Articles
  1. Credit & Loans

    Credit, Debit And Charge: Sizing Up The Cards In Your Wallet

    Not all plastic is equal! Learn the difference between the three kinds, and how each can affect your finances.
  2. Forex Education

    Understanding Forex Rollover Credits And Debits

    Forex trades are subject to receiving interest or being debited interest if positions are held overnight.
  3. Options & Futures

    Debit Spreads: A Portfolio Loss Protection Plan

    There are ways to control risks, reduce losses and increase the likelihood of success in your portfolio. Find out how spreads can help.
  4. Options & Futures

    401(k) Debit Cards: Taking A Swipe At Your Retirement Savings

    This is just another more convenient way to borrow from your plan. But at what cost?
  5. Investing

    Why do accountants use debits and credits instead of simple pluses and minuses? Why is the notation ...

    Debits and credits, and the technique of double-entry accounting, are credited (no pun intended) to a Franciscan monk by the name of Luca Pacioli. Known as the "Father of Accounting", he warned ...
  6. Investing on margin can be profitable but it's a risky play that needs care.
    Trading Strategies

    Margin Investing: Big Risk, Big Reward

    Investing on margin can be profitable but it's a risky play that needs care.
  7. Options & Futures

    What are the differences between divergence and convergence?

    Find out what technical analysts mean when they talk about a market experiencing divergence or convergence and how they affect trading strategies.
  8. Forex Strategies

    How do I use McClellan Oscillator for creating a forex trading strategy?

    Learn how to construct a forex trading strategy using the McClellan oscillator technical indicator supplemented with a moving average crossover.
  9. Trading Strategies

    What is a common strategy traders implement when using the McClellan Oscillator?

    Read about the common trading signals that are generated by the McClellan oscillator, a market breadth indicator often applied to the New York Stock Exchange.
  10. Technical Indicators

    What is the On-Balance Volume (OBV) formula and how is it calculated?

    Read about the formula and calculation for On Balance Volume, or OBV, which is a technical indicator that shows movements in trading volume.

You May Also Like

Hot Definitions
  1. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  2. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  3. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  4. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  5. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  6. Law Of Supply And Demand

    A theory explaining the interaction between the supply of a resource and the demand for that resource. The law of supply ...
Trading Center