What is buying power?
In one line: Buying power is the amount you can spend on new trades right now, based on your cash, your account type and any margin your broker lends you.
A simple example
You deposit $4,000.
- Cash account: buying power is $4,000 of settled cash. No borrowing.
- Margin account (stocks): under the Fed's Regulation T, you can usually buy up to twice your cash for overnight holds, so about $8,000.
Brokers can set lower limits. Some stocks need more margin, and some can't be bought on margin at all.
How it changes during the day
Buying power goes down when you buy and up when you sell. In a cash account, money from a sale isn't fully yours to reuse until the trade has settled. For US stocks that's 1 business day.
In forex and futures, "buying power" is often shown as "available margin." The idea is the same: how much new position your account can support.
Why it matters
Buying power tells you the most you can buy. It says nothing about how much you should buy.
That number comes from your stop. Say you risk 1% of $4,000, which is $40. Your stop is $2 a share away. That's 20 shares, about $1,000 at a $50 price. Far under the $8,000 your broker would allow.
The position size calculator does this in seconds.
A common mistake
Treating buying power as a target. Using all of it means borrowed money. A small move against you then hits twice as hard, and a Margin call gets closer.
Your size comes from your stop and your risk, never from your buying power.
Our cash vs margin account comparison explains which account fits a beginner, and how much to risk per trade covers the 1% idea.
Questions
Why is my buying power higher than my cash?
You likely have a margin account. The extra is money the broker will lend you, and you pay interest on it if you hold overnight.
Why did my buying power drop after I sold?
In a cash account, sale proceeds must settle before you can use them freely. For US stocks that's 1 business day.
Is day-trading buying power different?
Some brokers offer more buying power for trades opened and closed the same day. Rules changed in 2026, when the old $25,000 pattern day trader minimum was removed, so check your broker's current terms.
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