Margin Buying Power

What are the different types of margin buying power?

In margin accounts, there are two main types of buying power:

Intraday Buying Power

Intraday Buying Power is calculated as 4X your account's Margin Excess.

• Intraday Buying Power is the amount available to purchase securities intended to be sold the same day.
• Account appreciation or depreciation will increase or decrease your Intraday Buying Power, respectively.
• Instant Buying Power will immediately increase your Intraday Buying Power.
• If Intraday Buying Power is overspent during the day, you may receive an Intraday Margin Deficit (IMD) call the following trading day.

Overnight Buying Power (ONBP)

Overnight Buying Power is calculated as 2X the lesser of your account's SMA or Margin Excess.

• ONBP is the amount available to purchase securities intended to be held overnight.
• After liquidating an overnight position, ONBP is replenished by the sale proceeds, adjusted based on the maintenance requirement of the position sold.
• Holding positions that exceed your ONBP through 8:00 PM ET can result in Regulation T (RT) Call the following trading day

How do I calculate the margin buying power required for a trade?

To calculate the required buying power, divide the total trade amount by the leverage allowed on the stock.

Formula:

Required Buying Power = Trade Amount ÷ Leverage

Example (using 1.67x leverage):

$10,000 ÷ 1.67 = $5,988 required buying power

This is based on a 60% margin requirement, which means you must cover 60% of the trade, while your broker lends the remaining 40%.

Why 60%?

Margin Requirement = 1 ÷ Leverage

1 ÷ 1.67 ≈ 0.60, or 60%

How much stock can I buy with my available margin buying power?

To calculate the maximum trade size based on your buying power, multiply your available buying power by the leverage.

Formula:

Max Trade Size = Margin Excess × Leverage

Example:

If you have $6,000 in Margin Excess:

$6,000 × 1.67 = $10,020 max trade size

This allows you to use leverage to increase your buying power beyond the cash you have available.

Why does it say my buying power is insufficient?

If you're seeing an "insufficient buying power" message, this can occur for several reasons. Below are the most common causes and their solutions.

Open orders

When you place an order, the system reserves buying power for that trade. If you have open orders that haven't executed yet, they're tying up your available funds. Canceling open orders will immediately free up that buying power for other trades.

Different margin requirements

Not all stocks have the same buying power requirements. Each stock has its own maintenance requirement, which affects how much leverage you can use:

• If you want to buy a stock with a 25% maintenance requirement, you can use up to 4 times leverage on your purchase.
• If you want to buy a stock with a 100% maintenance requirement, you cannot use any leverage and will need the full cash amount.

When you place an order, the confirmation screen will show you the maximum number of shares you can purchase based on that stock's specific requirements.

Market order volatility

Due to market volatility, placing market orders before the market opens requires 115% of the order value in available buying power. During regular hours, you need 2% more buying power than the estimated purchase amount to place a market order. These "buffers" ensure your order does not exceed available buying power.