Buying Power Index (B.P.I.)
A composite indicator of consumer demand in specific cities, counties, and metro areas. Published annually by Sales and Marketing Management magazine, the B.P.I. reflects disposable personal income, retail sales, and population in the area.
Buying power refers to the amount of money you have available in your account to buy equities. When you buy equities your buying power goes down. When you sell equities your buying power goes up.
Traders Laboratory » Welcome to Traders Laboratory » Trading Dictionary » Buying Power Definition
Trading Dictionary Terms and definitions for active trading, forex, futures, stocks, and options
Go to Page...
Buying Power Variables
Buying power is rarely constant in the investing world. The number fluctuates from day to day based on market conditions, world economics and investor margins. EquityScholar.
Money Management and Buying Power
Arbitrary Number of Stocks
A first money-management method would be to trade in a limited number of stocks out of an unlimited list of stocks. A second method, which we will discuss later on, would be to trade a fixed, limited number of stocks.
The amount of money available to buy securities. This is determined by the sum of the cash held in the brokerage account and the loan value of marginable securities.
A transaction type that is a closing transaction for a short sell position.
In a margin account, the maximum dollar amount of marginable securities that the client can purchase or sell short without having to deposit additional funds.
The purchase of a controlling interest (or percent of shares) in a company's stock.
Amount of credit available to a client in a brokerage account for the purchase of additional securities and is determined by the dollar amount of securities that can be margined.
~: In a margin account, the dollar amount of securities the customer may purchase without making a cash deposit. The buying power in an account is a function of the SMA (which see).
The amount of money available to buy securities, determined by adding the total cash held in brokerage accounts and the amount that could be spent if securities were margined to the limit.
The money an investor has available to buy securities. In a margin ...
Margin Call ...
With more buying power, you can increase your total return on investment with less cash outlay. But be careful, trading on margin magnifies your profits AND losses.
Margin Call ...
Next post: Buying Power - Overnight & Day Trading
Want to become a day trader? Practice your strategies with the newly launched Tradingsim day trading simulator. Practice makes perfect.
Day Trading Buying Power
The rule increases day trading buying power to up to 4 times a pattern day trader's maintenance margin excess. For example, if a trader has $100,000 worth of equities, the leverage ratio is 4:1 meaning that it can buy securities of up to $400,000.
Day Trading Buying Power
What is my day-trading buying power under the rules?
You can trade up to four times your maintenance margin excess as of the close of business of the previous day.
Day Trading Buying Power
The rules limit day trading buying power to four times the day trader's maintenance margin excess. This calculation is based on the customer's account position as of the close of business of the previous day.
Day Trading Margin Calls ...
It compares the buying power with the selling power in relation to the opening price. If the price moves higher, the buying power tends to weaken and vice versa.
Normal Value Ranges ...
purchasing power or buying power - the amount of goods and services that money can buy at a given time.
purchasing power parity - the rate of exchange between two countries at which the price of a representative basket of goods is the same.
Option Buying Power Calculated based upon account equity less any requirements and pending purchases.
Buy order Buy stop order Buy the book Buy them back Buy write Buy-and-hold strategy Buy-and-write strategy Buyback Buydown Buyer credit Buyer's market Buyers/sellers on balance Buyin management buyout (BIMBO) Buying climax Buying power ...
The dollar's bottom line is not against gold, but instead the buying power of a good life here within our borders. So long as the world is seeking to break into our land of opportunity, the dollar will remain a powerhouse of currency everywhere.
For if the intrinsic value of a piece of money is less than its buying power it matters little how much less its intrinsic value is.
The primary risks you face are credit risk (the chance that you won't get your money back); market risk (the chance that interest rates will soar, reducing the value of your dividends as well as of your bond); and inflation risk (the chance that rising price levels will erode the buying power of ...
Buying stocks on margin allows you to double your buying power by borrowing up to 50% of a stock's price. You borrow this from your online broker and there are of course costs associated with this doing.
Whenever the account value rose, King Midas used the extra buying power of the account to purchase more stocks, either adding to existing positions, or starting new positions.
Short-term trades: Very high turnover, but not daytrading. The shortest holding was one day.
people is not necessarily towards making more money, but to preserve the wealth they have already accumulated by taking what we call "intelligent risks" to achieve reasonable returns that can simply outpace moderately rising inflation and/or the devaluation and loss of the greenback's buying power .
Further, take a look at your buying power. You'll notice that your buying power went DOWN, not up! And on top of that, you will get hit with margin for the $3.00 of risk you have in the trade! Think you are collecting money just because you are a "seller"?
On UpDown, if you're holding short positions, you might receive a margin call if your buying power falls below -$10,000.
In theory, support is the price level at which demand (buying power) is strong enough to prevent the price from declining further. The rationale is that, as the price gets closer and closer to support, and becomes cheaper in the process, buyers see a better deal, and are more likely to buy.
Trading currencies on margin lets you increase your buying power. Here's a simplified example: If you have $2,000 cash in a margin account that allows 100:1 leverage, you could purchase up to $200,000 worth of currency-because you only have to post 1% of the purchase price as collateral.
The sharp observer will note that the 25 percent maintenance margin requires the same level of equity as the four times day trading buying power.
Consumer Price index has high relevance due to the amount of inflationary pressure it applies to consumer's ~. When the price of goods in this basket rises, it erodes the value of the local currency.
Annual inflation reduces your ~. In recent years, the U.S. Government reports a 3% annual inflation rate. The business community doubles it, so that it better reflects the actual rise in living costs.
Since the broker provides capital on a percentage basis, the ~ of a margin account is constantly changing depending on the price movement of the marginable securities. Investors should keep a close eye on these metrics with the help of many broker tools that provide these insights.
As mentioned above, trading on forex margin gives you more ~ and the potential for more profits or losses. How this works is; a 1% margin trading forex account allows you to control a position size of $100,000 with $1,000.
The only loan you should be using is with your day trading margin ~. Do not start or continue to day trade, if you have to take out loans, credit, or use part of your retirement to get in the game.
"Investing in stocks that raise the dividend every year ensures that your income or wealth creation (if you're reinvesting dividends) increases your ~ rather than seeing it erode due to inflation.
When ~ is no longer enough to move prices up or when selling power is no longer enough to move prices lower.
A price gap that occurs at the end of an important trend. It signals that the trend is concluding.
You are expected to use half of your ~ in setting both forex trades. This enables you to enter a hedge when instance 4 and 5 above occurs.
Never wait for price to cut X 1 or X 3 and use all your ~ .
A CPI that continues to trend upwards month over month could be a signal that inflation is eroding ~ to the point that the Central Bank will raise interest rates to curb spending.
TeenAnalyst Advice: Having all your money in cash for a long period of time isn't a good idea because inflation will eat away at your ~. However, it's important to have access to some cash at all times for emergencies.
Leverage - Leverage refers to the increased ~ available in margin accounts. Leverage allows traders to enter larger positions than could be afforded with the money in a trading account alone. Leverage magnifies both profits and losses.
Support : A price, or price zone beneath the current market line where ~ is sufficient to halt a price decline.
Systematic risk : The relevant risk for pricing an asset: depends on the extent to which an asset's returns are affected by general economic conditions.
In the most aggressive form of pyramiding the increased margin ~ provided by gains is used to buy more. Obviously doing so is a very aggressive strategy that can have high rewards and high risks.
Related Terms: ...
While most of the other players we are going to discuss in this lesson do not have the size and clout to move the market in their favor, many of these bank traders are an exception to this rule and can leverage their huge ~ and inside knowledge of client order flow to move the market in ...
With these four calculations, Lowry invented two indexes: ~ and Selling Pressure. He devised an ever-evolving set of rules to establish them as reliable guides to market timing.
Using a lot of ~ on these transfers, the number of buyers who are willing to keep buying at such high prices becomes exhausted. They are not willing to pay anymore- the market has reached a critical point and the trend is for a reversal.
'This enables them to use the collective ~ of a fund to reduce charges on a small starting portfolio. They also get access to a professional fund manager to buy and sell individual stocks, rather than having to make these decisions on their own.' ...
Because it takes significant ~ to break through this resistance, such an event is considered a very positive event for the stock.
So, if consumers are spending less because inflation is rising and their ~ is decreasing, or because unemployment is rising, then the stock market will reflect that, generally.
Minimum initial deposit to open an account: No minimum deposit is required to open an account, but the account must have enough ~ to pay for a trade before it is placed. And for margin account, a USD 2,000 minimum is required to maintain a margin account. (Check out here).
Chartists could have used this information to focus their ~ on stocks within these two sectors. The other four sectors showed relative weakness because the slopes for their price relatives were in negative territory .
For example if inflation is running at 10% and the net after-tax return on your bond is 8%, the ~ of your investment is shrinking at a rate of 2% per annum.
Corporate Bonds ...
Because by the time they are repaid the principal loan amount, the ~ of that principal is diminished - rising commodity prices have caused an increase in the cost of finished goods.
Inflation refers to the fact that a given amount of currency will have a decrease in its ~ in the future. A given amount of money will buy less quantity of goods in the future than it will today.
There are fresh longs ready to speculate, and short-sellers who don't realize they're trapped. These two forces combine to generate tremendous ~ that can trigger explosive moves. For this reason alone, traders should consider the virtues of bottom-picking.
Inflation: Economic condition where consumer goods price increases, limiting ~.
To verify, note that if you had used all of your margin in your initial purchase, then, since $3,000 gives you $150,000 of ~:
Pip Values ...
It's possible to eliminate all possible risk of losing money (preserve capital) by placing money in a steel safe. But even under these circumstances, inflation will erode the ~ of that money over time. While buying stocks entails greater risk, the potential rewards are greater too.
What often happens is that if the interest rate increases by only half a percent per year, the actual ~ of your $10,000 at the end of 5 years may actually be only about $7,500 or so.
In an uptrend three long black days occur that open at the previous day's close. This pattern is similar to the Three Black Crows pattern but typifies a more severe loss of ~. A bearish trend is almost certain.
I have learned that new prop traders get ~ and technology from their firms but, depend on other traders when it comes to technique and strategy. I greatly-appreciate your willingness to share and help shorten the learning curve.
On the upside, TIPS suit investors hungering for some liquidity, says Greg McBride, CFA, senior financial analyst at Bankrate.com. "(But) at best, you're lucky to preserve your ~," McBride says.
Related Links: ...
00 if you take out the broker's commission. Not that much profit, but then he only used less than $11,000 ~ from his account. And that's exactly what a novice should be doing -- keeping trade size low -- and that's after using a simulator.
Following the surge, which uses up a lot of ~, the number of those buyers willing to keep buying at these high (-inflated) prices becomes exhausted.
Such stocks can also be sensitive to inflation, which erodes the ~ of the dividend. Also, industries that once looked very stable have become less so in a deregulated and increasingly global economy.
It allows traders to open positions on amounts that greatly exceed their account limits and so increase their ~. Swissquote offers a 1% margin (or 1:100 leverage), which means you can control 100 times your deposit in the real market.
Externally, it is changing because the matrix of Market Participants has changed dramatically in the last decade. Instead of just 3 levels of market participants, as the Dow Theory defined, there are now 9 levels of market participants, each with their own agendas and ~s, ...
At the same time, the NFP numbers can also measure whether inflation is on the rise or not in the economy. A rise of inflation would obviously be of interest to traders since it would mean that the national currency has less ~ and would therefore be able to buy one less foreign currency.
If you had $10,000 sitting in a bank account ten years ago and you never touched it, maybe you would have $10,500 today. Would $10,500 buy you the same amount of goods or services that $10,000 would have bought you ten years ago? In other words, would it have the same ~?
Continue Reading ...
The theory was that the additional circulation of this money would add to the economic activity. However, the risk of this type of money supply involves inflation. When a currency is debased like this it can result in high levels of inflation which causes us to reduce our ~ on goods and ...
Interest rates change in response to a number of factors-changes in supply and demand for credit, fiscal policy, exchange rates, economic conditions, and crucial for the bond market, changes in expectations of inflation. High inflation reduces the future ~ of interest payments and the ...
new shares of its fund, whether to launch a new product or meet increasing market demand, it turns to someone called an authorized participant (AP). An AP may be a market maker, a specialist or any other large financial institution. But essentially, it's someone with a lot of ~.
This could be interpreted like: "a stock after being in overbought condition started to move down and it could be a sign that ~ of the bullish traders became exhausted".
Smart investors can learn how to combine the two purchase methods to buy more savings bonds than they otherwise could. To learn about the I bond purchase limits and how to maximize your total ~, take a few moments to read this overview.
The theory is that when a significant number of participants are bullish, they are already positioned on the long side and there is little potential ~ left. If most participants are bearish, selling pressure has reached an extreme and prices will reverse to the upside.
Stock prices fall back a second time, unable to pierce the resistance level. These two sharp advances with relatively heavy volume have exhausted the ~ in the stock. Without that power behind it, the stock reverses its upward movement and falls into a downward trend.
Pyramid To increase holdings that an investor has by using the most ~ available in a margin account with paper and real profits. Quarterly Earnings Change (%) Historical earnings change between the earnings most recently reported and the quarter preceding.
buying panic (investment & finance)
~ (investment & finance)
buying the basis (investment & finance)
buyout (investment & finance)
BW (investment & finance)
bylaws (investment & finance)
bypass trust (investment & finance) ...
They also ignore the subtle deterioration in the quality of spending choices due to the shift of ~ from people who have demonstrated a superior ability to invest or produce (creditors) to those who have demonstrated primarily a superior ability to consume (debtors).
A-Z: Buying power
See also: What is the meaning of Market, Stock, Trading, Investor, Investment?