Why Buying Power Is a Different Number From Your Cash

You deposit 10,000 into a new margin account. The balances page shows cash of 10,000 and buying power of 20,000.

That’s not an error. Buying power is the broker’s figure for how much you may put into new trades, and it’s calculated from your equity, the account type, federal margin rules and the broker’s own policy. Cash is just one input.

In a cash account

Here the two numbers sit close together. Buying power is roughly your settled cash, because every purchase in a cash account has to be paid for in full.

Roughly, because many brokers let you buy with sale proceeds that haven’t settled yet and include those proceeds in the buying power they display. Using them is allowed. Selling what you bought with them before they settle is a good faith violation. The settled cash balance can never cause one.

In a margin account

Margin buying power comes from Regulation T, the Federal Reserve rule on brokerage credit. It sets an initial requirement of 50% for most stock purchases: you put up at least half, and the broker can lend the rest. For positions you plan to hold overnight, that generally makes buying power up to twice your excess equity, the equity in the account above what the current positions already require.

Until June 4, 2026, pattern day traders could get more, but only during the day. Under the old FINRA Rule 4210 framework, an account flagged as a pattern day trader could receive intraday buying power of up to four times its maintenance margin excess, which is equity above the maintenance requirement. That allowance is gone. It went with the rest of the pattern day trader rules when FINRA replaced them with intraday margin requirements, under which the 25% maintenance requirement applies throughout the day and a shortfall against it, on a day with margin-reducing trades, has to be met as promptly as possible. Some brokers may keep the old 4x figure for now. They have until October 20, 2027 to switch. Under the old setup, an intraday figure that looked enormous at the open could still leave you with a margin call the next morning, if you carried home a position that was sized for the day and never checked against what the account was allowed to hold overnight.

Both figures are ceilings. Brokers can set lower limits across the board, and they commonly cut buying power for particular stocks, such as volatile or low-priced names, recent listings, or anything else they choose to treat as riskier. A stock can carry a higher house requirement than the 50% initial and 25% FINRA maintenance minimums, or be marked as not marginable at all, and your buying power for that one ticker then drops, sometimes to nothing more than the cash you have.

Check the stock’s margin requirement before you size the trade. Most platforms show it on the order ticket or in the stock’s detail page.

Having it and using it

Buying power tells you how much you can buy. It says nothing about how much you should, and that second number is yours to work out.

Borrowed money magnifies the moves in both directions, and a price drop that would be tolerable on a cash position can take a leveraged account to a margin call surprisingly fast, as the arithmetic below shows for a position that uses every dollar of overnight buying power.

A gap through that level overnight can leave equity below zero. Whether you can lose more than you put in has a short answer in a margin account: yes.

So start from the loss you’d accept. The trade risk worksheet turns that loss, an entry and a stop into a share count. Then compare the result with your buying power. If the worksheet gives the smaller number, go with the worksheet.