I am a little confused about the buying power.  Is it a loan and how do you pay it back without losing value in your portfolio?

Your account starts out with $100,000.  You are allowed to borrow an additional $100,000, giving you total buying power of $200,000.  The additional $100,000 is a loan and is only given when you buy stock, and you pay it back by selling stock.  The loan amount does not change the value of your portfolio except for the interest that is charged on the loan is taken out of your account.  But if you borrow money to buy stock and that stock earns money, when you sell the stock you pay back the amount borrowed and keep the profits.  The same if you borrow to buy stock and the stock goes down, when you sell the stock you pay back the amount borrowed and the loss comes out of your portfolio value.  Hope this helps!!

perfect answer.  thank you

 also to add to derrickas awesome post... your buying power increases as your equity increases even if you are already borrowing money. buying power is usually your equity doubled

I meant to put that in there, your available loan amount is twice your portfolio value.  If you portfolio is over $100,000, you have that much more buying power, but if your portfolio falls below $100,000 you have less available loan amount and less buying power.

thank  you for elaborating.  sometimes i wonder if i will get this, but so far  so good.  thank you  again

Thank you fdr asking this question I was clueless on how that worked too!

it's a bad habit to use that extra, if the market has bad couple of days it is very hard to recover. I try not to use it but some times it cant be helped if you want to move forward.  use caution!

THANK YOU DERRICKA, THAT WAS VERY HELPFULL ADVICE. I JUST STARTED PLAYING ON 5-9-08 AND HAVEN'T GOT THE FAINTES IDEA WHAT I'M DOING BUT I'M LEARNING AND HAVING FUN AT IT TOO. A WHILE BACK I TOOK A BUSINESS CLASS AND HAD TO DROP IT CAUSE I WAS AS DUMAFIED (IS THAT A WORD? WOW I'M AN INVENTER! CAUSE I'M SURE NOT AN ENGLISH MAYOR. OH SORRY I DO THAT SOME TIMES) WHEN I  DROPPED THE CLASS AS I WAS WHEN I  FIRST STEPPED IN. IF THEY WOULD HAVE HAD THIS PROGRAM I WOULD HAVE PROBABLY LEARNED SOMETHING. WELL DERRICKA I'D APRECIATE ANY MORE KNOWLEDGE THAT YOU'D LIKE TO SHARE SEND ME A LINE. HAVE A GREAT DAY, BEAUTI

wm6787:

it's a bad habit to use that extra, if the market has bad couple of days it is very hard to recover. I try not to use it but some times it cant be helped if you want to move forward.  use caution!

I don't always use the margin, but when the market is good you may as well get yourself into some stocks that are making some money, and as long as you are making more money than you are paying in interest it is worth it!  You can't make any money if you don't invest it.