Buying Power

AAA

DEFINITION of 'Buying Power'

The money an investor has available to buy securities. In a margin account, the buying power is the total cash held in the brokerage account plus maximum margin available.

Also referred to as "excess equity."

INVESTOPEDIA EXPLAINS 'Buying Power'

For example, if you have $1,000 cash in a margin account and the maximum margin rate is 50%, then your total buying power is $2,000. For a non-margin account, the buying power is equal to the amount of cash in the account.

RELATED TERMS
  1. Equity Curve

    A graphical representation of the change in value of a trading ...
  2. Cash

    Legal tender or coins that can be used in exchange goods, debt, ...
  3. Initial Margin

    The percentage of the purchase price of securities (that can ...
  4. Leverage

    1. The use of various financial instruments or borrowed capital, ...
  5. Margin Account

    A brokerage account in which the broker lends the customer cash ...
  6. Margin Loan Availability

    1. The dollar amount in an existing margin account that is currently ...
Related Articles
  1. Is there a maximum amount of stock an ...
    Active Trading Fundamentals

    Is there a maximum amount of stock an ...

  2. Margin Trading
    Options & Futures

    Margin Trading

  3. Leveraging Leverage For Bigger Profits
    Home & Auto

    Leveraging Leverage For Bigger Profits

  4. Take On Risk With A Margin of Safety
    Fundamental Analysis

    Take On Risk With A Margin of Safety

comments powered by Disqus
Hot Definitions
  1. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  2. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  3. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
  6. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the ...
Trading Center