FoundationsMAD Academy0:45Accounts

The Number That Is Not Your Money

Buying power in a margin account includes borrowed funds, so using all of it means being fully leveraged.

0:45 · 6 scenes

This lesson is part of a MAD Academy plan.

What the Lesson Covers

  1. 0:00Buying power is not your balance. Much of it is the broker's money.
  2. 0:05Where the number comes from. In a margin account it is typically about twice your equity overnight. Intraday, it depends on the broker's margin method.
  3. 0:14What using it all means. Spending your full buying power means every dollar above your equity is borrowed.
  4. 0:23The day-trade rule changed. The old twenty-five thousand dollar day-trading minimum is gone. Brokers now check intraday margin on the positions actually held.
  5. 0:32The interest. Margin interest accrues daily on the borrowed portion, whether the trade works or not.
  6. 0:40Read it as a credit limit, not as a balance.
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Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
The Number That Is Not Your Money — MAD Academy Training Video · MadStockAlerts