# Understanding Margin in a Stock Trading System **URL:** \ **Category:** C2\ **Created:** [April 30, 2010, 1:30am UTC](https://forums.collective2.com/t/understanding-margin-in-a-stock-trading-system/4327 "2010-04-30T01:30:10Z")\ **Posts on this page:** 2\ **Page:** 1
**Author:** ![GlobalInvestingRep](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/globalinvestingrep/32/673_2.png) [@GlobalInvestingRep](https://forums.collective2.com/u/GlobalInvestingRep)\ **Post date:** [April 30, 2010, 1:30am UTC](https://forums.collective2.com/t/understanding-margin-in-a-stock-trading-system/4327/1 "2010-04-30T01:30:10Z")
Hello to all: I sent the following to the admins at C2 but I did not receive a response. I decided to post it here where I may receive a response. I know margin is an area where there is some confusion on C2 so hopefully I can get some feedback from the participants here. Thanks in advance to those who take the time to reply! "I would like to get a clearer understanding of how margin is calculated at C2. I do have actual margin accounts at various brokers but the margin reporting there is different. I have included my “Model Account Status” so that you may use it as a guide to explain the various components. Model Account Status Started $20,000 Buy Power $3,780 Cash $215 Equity $3,564 Cumulative $ ($260) Total System Equity $19,739 Margined $0 Open P/L $3,564 Now looking at the chart above, it indicates that $0 dollars are margined but I have a portfolio of stocks valued at $31,454.99. Therefore it would seem as though I would be margined by about $11,454.99 although I realize that is not an exact figure. It also lists my buy power as $3,780 but I attempted place a trade on 4/23/10 but I was limited to only about $400. Also, I thought the cash portion would reflect the amount available to invest before dipping into margin. I think you understand my confusion with how margin is reported at C2. The “Started” and “Open P/L” I understand. The others are somewhat confusing. If you could make the above clearer I would certainly appreciate it. Thanks and take care!" ---
**Author:** ![MatthewKlein](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/matthewklein/32/21382_2.png) [@MatthewKlein](https://forums.collective2.com/u/MatthewKlein)\ **Post date:** [April 30, 2010, 9:13am UTC](https://forums.collective2.com/t/understanding-margin-in-a-stock-trading-system/4327/2 "2010-04-30T09:13:17Z")
Charles, Please forgive me. This question has been asked and answered a few times in the forums, and so an email response fell to the bottom of my list (for which I apologize; that is no excuse). We do indeed need to create a comprehensive reference on C2 to explain this better. Until I can, let me summarize very very briefly here, and suggest that if you need more detail, a quick forum search might help (maybe try to search for “buying power”?) Briefly, then: Stock purchases are allowed 50% margin. However, because of the need to support different instrument classes from one pool of margin, we simply deplete your buying power at different rates for each instrument. For example, if you start a system with $1,000 in cash, you will see a “Buying power” of $1,000. But if you buy 50 shares of stock at $10 per share, you will see your buying power decrease by only $250 dollars, not $500. That effectively allows you to use 2:1 leverage. Selling short is handled a bit differently, with your cash increasing due to the short sale, but a 2x offset applied to “margined” so that your effective buying power decreases by 50% of the short amount. Open P/L is your “equity” and is added to your buying power. It’s a bit unintuitive, but it is the simplest way to support multiple asset classes from one consolidated pool of capital. Matthew