On the Portfolio Summary screen there are 3 main
columns: account value, buying power, and cash. This page will explain what
these headings mean and how they relate to each other.
Cash - is, as you might guess, the amount of money you have in
your portfolio. Cash in your account earns interest and can be used to buy
stocks or options. Because the Simulator allows borrowing money to invest (margin),
the cash balance can go be negative - this means you have borrowed money
to invest.
Account Value - is what your portfolio is currently worth.
It is the calculated as:
= cash + market value of stocks + market
value of options - market value of shorted stocks
As you can see from the above calculation, account value simply adds together
all the assets in your portfolio and subtracts the short positions. (Shorts are
subtracted because they are a liability and must eventually be covered). The
higher the account value, the more money you've made so far. For example, if
your account value rises from $100,000 to $110,000, it means that you've made
$10,000 or 10%.
Buying Power - is the value of securities that you can
still purchase. Buying power is different from cash because the Simulator
allows you to borrow money to invest. We describe how buying power is
calculated on our "how margin works" help page,
however, it is worth noting that all margin calculations are done
automatically, you just have to ensure that the buying power does not fall
below zero or you will get a margin call.
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