What is Buying Power?
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What is Buying Power?

Buying power

Buying power is the money an investor has available to buy securities and equals the total cash held in the brokerage account plus all available margin.

For margin accounts, there are two kinds of buying power, namely: Overnight Buying Power (ONBP) and Day-Trade Buying Power (DTBP).

Overnight Buying Power (ONBP)

Overnight Buying Power (ONBP) is the amount of money you have available to buy securities and hold that position overnight. In the majority of cases, this amount is simply double the cash on hand.

Day Trading Buying Power (DTBP)

Day Trade Buying Power (DTBP) refers to the funds you have available in your account to place trades on a given trading day. Your DTBP is determined at the beginning of the day and will not increase based on sales of marginable stocks that were held overnight or deposits made on the same day. You will need to wait until the following day to see the DTBP from these actions reflected in your account. A purchase during the current day will decrease your DTBP and a subsequent sale of that stock (a day trade) would increase it again.

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