Buying Power refers to the amount of money an investor has available to purchase securities. The whole amount in the brokerage account plus all available margin equals purchasing power. Margin is a borrowing from the broker that allows an investor to buy more securities than they could with cash alone. The margin available varies according to the security and the broker.Buying power can be used to purchase stocks, bonds, and other securities. It can also be used for day trading, short selling, and option trading strategies. Having buying power gives investors more flexibility when it comes to investing and allows them to take advantage of opportunities as they arise.It's important for investors to understand their buying power so they can make informed investment decisions. Knowing how much margin is available and what restrictions are in place will help prevent over-leveraging and protect against excessive losses if the market takes a turn for the worse.
