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Buying power & cash balance
What is the difference between ‘buying power’ and ‘cash balance’?
Cash balance represents the total balance of AUD or USD at a certain point in time. Buying power accounts for additional inflows and outflows of cash (pending orders, unsettled funds from a deposit or transaction, etc.) and represents funds available to invest or withdraw at a given time.
Example:
You have a cash balance of A$1000 and a buying power of A$1000. If you place a trade for A$500, your buying power will instantly reduce by A$500. However, as settlement occurs on T+1, your cash balance will remain at A$1000 until the stock purchase has been settled. Similarly, if you were to initiate a withdrawal of the other A$500 it will be instantly deducted from your buying power and remain in your cash balance until the process is finalised and the funds have been removed.
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