When you short sell a stock, you get cash immediately after the short sale, but this cash is held in reserve (you can’t use it to buy stocks), along with enough cash to “cover” your short (since you need to be able to repay the stocks you short sold). If your contest allows short selling, the mechanics work a bit differently. You can see the volume for the securities you’re trying to purchase on the Trading screen:Ĭontests With No Margin Or Futures Trading, But Allow Short Selling This is especially relevant with Options trading, and penny stocks. You are trying to buy a security with very low volume – generally speaking, you can only buy as much of a security as trades in the actual markets (more or less, depending on your contest rules).All mutual fund orders execute around 6:00 pm New York Time (if they are placed before the markets close, otherwise they will execute the next business day at 6:00 pm).Orders placed after the markets close will not execute until the next morning when the markets open.You can see open orders on your Order History page: You can either wait for it to execute, or you can cancel the order to get your buying power back immediately. If you have very low buying power, but lots of cash, chances are you have a big order sitting open. Your open orders are trades you’ve tried to place, but have not yet executed (for example, if you try to buy a stock while the markets are closed). If your contest does not allow short selling or day trading, your buying power will be easy to calculate: Contests With No Margin, Short Selling, Or Futures Trading The “complete” formula to calculate your buying power can be complex, depending on your contest rules, so we will start with the most simple forms and work towards the most complicated. You can review the rules for your contest on your Account Balances page, on the right side: Each of these items will affect your buying power differently. A number of things can affect how much buying power you have, but the basic idea is that you might have cash you’ve already set aside for another purchase, you might have the ability to borrow money for trades, or you might have some of your buying power tied up in “Margin Requirements”. Your buying power is the money you have available to use to purchase securities.
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This will be a quick primer on how to see exactly how your buying power is calculated, what affects it, and how to recover it when you want to make more purchases. Calculating your buying power can be tricky, and it gets trickier with more complex contest rules.
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