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.

Buying Power

Money in a margin account that an investor has available to purchase securities. An investor with a margin account has buying power if the market value of securities placed as collateral in the margin account does not drop below a predetermined level. For example, if one has $10,000 in collateral in a margin account and the account has a maintenance level of 25%, one's buying power is $40,000. See also: Margin call.

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.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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