Why is my Buying Power a Negative Number?

When I call the Alpaca API, I am getting a negative buying power. When I look in the Alpaca dashboard, the buying power shows up to a high number which doesn’t make sense. What’s wrong here? Did anyone else face similar issues?

Maybe need a bit more information to answer this…

  1. Is this in a paper or live account?
  2. What does the API return? Maybe get the account values using the account API and screenshot the results for all the attributes.
  3. What do you see in the dashboard? Maybe screenshot the balances tab (Alpaca | Algo Trading Commission Free with REST API)

If this is a paper account it may be the result of a know bug which the Alpaca engineers are working feverishly on.

Hi, I am doing live trading and not paper trading. OK, the problem I used to have went away, but something doesn’t make sense. How can I have more buying power than my portfolio value. There is still something fishy going on. Please see attached screenshot for more details.

Also see attached a screenshot of the dashboard.

You have a margin account, meaning you can borrow money to buy securities.

Read more about it here:

Details from Alpaca’s API documentation.

multiplier

string

Buying power multiplier that represents account margin classification; valid values 1 (standard limited margin account with 1x buying power), 2 (reg T margin account with 2x intraday and overnight buying power; this is the default for all non-PDT accounts with $2,000 or more equity), 4 (PDT account with 4x intraday buying power and 2x reg T overnight buying power)

buying_power

string

Current available $ buying power; If multiplier = 4, this is your daytrade buying power which is calculated as (last_equity - (last) maintenance_margin) * 4; If multiplier = 2, buying_power = max(equity – initial_margin,0) * 2; If multiplier = 1, buying_power = cash

@CodingFire Is correct. US brokers, like Alpaca, extend credit to their users who have ‘margin accounts’. The maximum amount of credit, or margin, a broker can extend is regulated by the SEC. The SEC regulation is called ‘Regulation T’ so the amount of margin a broker can extend is often referred to as ‘RegT’ margin. Typically a broker can lend an account holder $1 for every $1 they have in equity. The equity is simply the value of an account if it is liquidated (ie the sum of the cash plus the value of all the long positions minus the value of any short positions minus the value of any outstanding margin loans) So, if an account holder has $2000 in cash in their account, a broker will let them buy $4000 worth of stocks. All Alpaca accounts with equity over $2000 are extended this amount of margin (or credit).

The ‘RegT buying power’ of an account is the maximum buying power (ie 2x the equity) minus the value of the stocks one already holds (ie that buying power has already been used) minus any outstanding orders. So, in this case the equity in the account is $2283.83. The gross ‘RegT buying power’ is 2x that amount or $4567.66. However, the account has already ‘used’ $1413.82 of this (which is the long market value plus the abs value of the short market value). The buying power is therefore $4567.66 - $1413.82 = $3,153.84.

Outstanding orders also immediately reduce buying power. Orders which increase a position (ie a buy long or a sell short) are counted against, and reduce, buying power. Orders which decrease a position (ie a sell long or a buy short) however do not ‘add back’ or increase buying power. This accounts for the possible scenario where the ‘increase’ orders fill but the ‘decrease’ orders don’t. The buying power calculation assumes this worst case.

Now, think of ‘buying power’ as your credit card company listing your ‘credit limit’. You can spend this amount and the credit card company will happily lend you the money. However, they will also charge you interest on that borrowed money. This is the same with a broker (and Alpaca). The current interest charged is .01% per day or 3.75% annually (more info on this is in the docs). However, just because a broker will extend you this much credit, it is your choice if you want to use that credit. Don’t feel you need to spend all your buying power. Weigh how much you are spending on margin interest, and the associated increase in volatility, with your trading and investment goals.

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nice…
is there 2 post

Fantastic. What if I do not want to have a margin account? Can I opt out of having a margin accoun, and have an account where the brokerage doesn’t extend me credit? I do not want that.

Currently, Alpaca only offers margin accounts. However, disabling margin has been a feature request. Take a look at this post for discussions on that topic.

I am glad the people feel the same way as I do with trading using borrowed funds. I just don’t feel comfortable with this. What is Alpaca’s plan to turn off margin account feature?

so if we dont have margin is the equity required to not be considered a day trader is going to lower… id hope so. also it looks like a bug with margin in live too might be because its the first day im seeing this