Debit Balance

AAA

DEFINITION of 'Debit Balance'

In a margin account, money owed by the customer to the broker for funds advanced to purchase securities. The debit balance is the amount of funds the customer must put into his or her margin account, following the successful execution of a security purchase order, in order to properly settle the transaction.

INVESTOPEDIA EXPLAINS 'Debit Balance'

When buying on margin, investors borrow funds from their brokerage and then combine those funds with their own to purchase a greater number of shares than they would have been able to purchase with their own funds. The debit amount recorded by the brokerage in an investor's account represents the cash cost of the transaction to the investor.

RELATED TERMS
  1. Minimum Margin

    The initial amount required to be deposited in a margin account ...
  2. Broker

    1. An individual or firm that charges a fee or commission for ...
  3. House Maintenance Requirement

    The minimum amount of equity that an account holder must maintain ...
  4. Credit Balance

    In a margin account, the amount of funds deposited in the customer's ...
  5. Margin

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

    The minimum amount of equity that must be maintained in a margin ...
Related Articles
  1. What is a margin account?
    Trading Strategies

    What is a margin account?

  2. My broker just sold securities out of ...
    Investing

    My broker just sold securities out of ...

  3. Does the party loaning shares in a short ...
    Active Trading Fundamentals

    Does the party loaning shares in a short ...

  4. Margin Trading
    Options & Futures

    Margin Trading

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center