Tradeking stock buying power

Tradeking stock buying power

Author: All888 Date of post: 05.06.2017

Buying power serves as a measurement of the dollar value of securities that one may purchase in a securities account without depositing additional funds.

In the case of a cash account where, by definition, securities may not be purchased using funds borrowed from the broker and must be paid for in full, buying power is equal to the amount of settled cash on hand. In a margin account, buying power is increased through the use of leverage provided by the broker using cash as well as the value of stocks already held in the account as collateral.

When looking at my online broker account, I see an account value, cash value and purchase power number. How are these calculated?

The amount of leverage depends upon whether the account is approved for Reg. T margin or Portfolio Margin.

In the case of a Portfolio Margin account, greater leverage is available although, as the name suggests, the amount is highly dependent upon the make-up of the portfolio. As the margin rate under this methodology can change daily as it considers risk factors such as the observed volatility of each stock and concentration, portfolios comprised of low-volatility stocks and which are diversified in nature tend to receive the most favorable margin treatment e.

Margin Account vs. Cash Account

In addition to the cash examples above, buying power may be provided to securities held in the margin account, with the leverage dependent upon the loan value of the securities and the amount of funds, if any, borrowed to purchase them. The same principals would hold true in a Portfolio Margin account, albeit with a potentially different level of buying power.

tradeking stock buying power

Finally, while the concept of buying power applies to the purchase of assets such as stocks, bonds, funds and forex, it does not translate in the same manner to derivatives. Most securities derivatives e.

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The margin requirement on short options, therefore, is not based upon a percentage of the option premium value, but rather determined on the underlying stock as if the option were assigned under Reg.

T or by estimating the cost to repurchase the option given adverse market changes under Portfolio Margining. Please note that while we read and take into consideration all feedback, we are not able to respond directly to comments or questions submitted through this forum.

Should you have an inquiry or require assistance, please contact Customer Service. Related Articles Overview of IB issued Share CFDs Margin Requirement on Leveraged ETF Products Stock Yield Enhancement Program FAQs Are there any qualification requirements in order to receive Portfolio Margining treatment on US securities positions and how does one request this form of margin?

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