Margin buying power calculator
By Jude Wallis
Margin buying power is cash divided by the initial margin fraction. $10,000 at 50 percent initial margin supports $20,000 of buying power, made from $10,000 cash and $10,000 borrowed.
Buying power
$20,000.00
$10,000.00 would be borrowed at this initial requirement.
- Cash
- $10,000.00
- Initial margin
- 50%
- Borrowed
- $10,000.00
Cash available to meet the initial margin share.
Required cash share of a new purchase. 50 here means half.
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The formula
is cash and is the initial margin percentage written as a decimal. Borrowed amount is buying power minus cash.
Divide cash by the margin fraction
At 50 percent initial margin, divide $10,000 by 0.50. Buying power is $20,000, of which $10,000 is borrowed. How margin trading works explains the account.
A lower teaching percentage
At a 25 percent teaching input, $10,000 divided by 0.25 is $40,000. The borrowed amount is $30,000.
Sensitivity, not a rule statement
The 25 percent case is a sensitivity illustration, not Regulation T. The entered percentage controls the identity. A margin account uses assets as collateral.
Scope of buying power
This result shows opening buying power and the borrowed amount from one margin percentage. Maintenance calls, interest and price changes are separate. This is educational material, not financial advice.
Worked examples
50 percent initial margin
Cash is $10,000 and initial margin is 50 percent. What are buying power and borrowed amount?
- Buying power is , so $20,000.
- Borrowed amount is , so $10,000.
$10,000 cash at 50 percent initial margin supports $20,000 of buying power and $10,000 borrowed.
25 percent sensitivity
Cash is $10,000 and the teaching initial margin input is 25 percent. What are buying power and borrowed amount?
- Buying power is , so $40,000.
- Borrowed amount is , so $30,000.
$10,000 cash at the 25 percent sensitivity input supports $40,000 of buying power and $30,000 borrowed.
Multiplying cash by the percentage
Buying power divides cash by the margin fraction. Multiplication would calculate the margin deposit on a stated position instead.
Common questions
Is borrowed amount the same as cash?
It is in the 50 percent example, but it changes with the entered margin percentage.
Does 25 percent state Regulation T?
No. It is a sensitivity illustration.
Is this financial advice?
No. It is educational material for the buying power identity.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.