buying power

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."

Notes:

For example, if you had $1000 cash in a margin account and the maximum margin rate is 50%, then your total buying power is $2000. For a non-margin account, the buying power is equal the amount of cash in the account.

See also: Cash, Leverage, Margin Account

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Buying power

The amount of money available to buy securities, determined by adding the total cash held in brokerage accounts and the amount that could be spent if securities were margined to the limit.

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buying power

1. The amount of liquid funds available for investing. A large amount of buying power indicates that significant funds from investors are available to fuel a bull market.

2. The funds in an investor's brokerage account that may be used for purchasing securities. An investor's buying power includes cash balances plus the loan value on securities held in the account.