Alexis Kestler
I know how frustrating it can be when you go to make a trade on Robinhood and see that dreaded "not enough buying power" message. As a fellow Robinhood user and investing geek, I‘ve been there too!
Not to worry – in this comprehensive 2800+ word guide, I‘ll explain everything you need to know to resolve Robinhood‘s pesky buying power error for good.
By the time you‘re done reading, you‘ll be a buying power expert ready to get back to trading on Robinhood without limitations. Let‘s get started!
What Exactly is Buying Power on Robinhood?
Before we fix the problem, it‘s important to understand what buying power is and how Robinhood calculates it.
In simple terms, buying power refers to the total amount of money you have available to purchase securities or cryptocurrencies in your Robinhood account.
It‘s essentially the maximum purchasing capacity you have based on your account balance, deposits, and any brokerage restrictions.
Robinhood determines your buying power as follows:
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For stock/ETF purchases: You need the full purchase price plus an extra 5% buffer. So if you want to buy $100 worth of stock, you need $105 in buying power.
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For options contracts: Robinhood requires the full cost of the premiums plus 20% extra. Higher buffer for increased options risk.
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For crypto purchases: Only the actual cash balance in your account contributes to crypto buying power. Your stock holdings don‘t help for crypto buys.
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Account type matters: Buying power varies between standard taxable accounts vs Robinhood Instant/Gold accounts due to settlement time differences.
So in short, buying power decides whether or not Robinhood will approve a trade or purchase. Time to fix ours!
Why You Might See "Not Enough Buying Power"
From my experience, there are two main reasons you could encounter this error:
1. Your account doesn‘t have enough cash to satisfy the required buffers
The most common reason is your cash balance is too low to fulfill the 5% equity buffer, 20% options buffer, or cover the crypto purchase amount.
2. Attempting to buy more than your total account value
For example, let‘s say your total account value is $500. But you try to buy $600 worth of Tesla stock. Even with $500 cash, it exceeds 100% of your $500 account value, so Robinhood will deny it.
The same could happen if you try to buy $1000 of Bitcoin but only have $500 cash on hand.
Bottom line – Robinhood wants you to have a decent cash cushion beyond the cost of purchases. Now let‘s get to the good stuff…
How to Finally Fix Robinhood‘s "Not Enough Buying Power" Error
Take a deep breath. We‘ll get through this! Here are 3 surefire ways to get past the buying power limitation:
1. Deposit More Cash into Your Account
The most straightforward fix is to deposit more funds into your Robinhood account. Even an extra $100 or $200 can provide the buying power boost you need.
I recommend adding enough to give yourself a buffer so you aren‘t bumping up against the minimum requirements. Some tips:
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Transfer from your checking account via ACH deposit. Just remember funds take 2-3 days to fully settle.
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Faster option is wiring money which credits same business day, but may have fees from your bank.
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Deposit more than you need to prevent buying power issues for future trades or crypto purchases.
Once the cash is settled, you should see the buying power error gone and ready to trade!
2. Sell Existing Positions to Free Up Buying Power
If adding new cash isn‘t ideal, consider selling some current positions to generate proceeds for buying power.
Even selling small amounts of stock or crypto can give you the boost you need. Some guidance here:
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Review your portfolio for underperforming positions or trades you‘re less confident in.
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Use the Robinhood app to calculate exactly how much proceeds you‘ll get from selling different amounts.
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Make sure to sell enough to fully cover the cost of whatever you want to purchase. Do the math!
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Avoid selling everything to minimize tax impacts. Be strategic.
Selling existing holdings is a great way to recycle capital into new opportunities!
3. Contact Robinhood Customer Support
If you‘ve verified sufficient settled cash balance and account value, but still see the buying power error, it makes sense to have Robinhood take a closer look.
Reach out to their customer support via email or phone (they have 24/7 service). Here are some tips:
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Clearly explain the details of your situation – dollar amounts, account types, etc. The more specific you are, the better.
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Ask them to validate that your account meets the minimum buying power requirements for the transaction you want to make.
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If there‘s an error, they may spot it and get it fixed quickly. But don‘t expect special treatment on requirements.
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Be patient and polite. Remember, the support reps don‘t make the rules.
In most cases, you‘ll probably resolve it yourself using tip #1 or #2. But for persistent issues, Robinhood support can investigate and provide peace of mind.
Frequently Asked Robinhood Buying Power Questions
Let‘s cover some of the most common buying power questions:
Why does Robinhood require my SSN?
Robinhood, like all financial institutions, is required to collect your social security number when you open an account. This allows them to verify your identity and ensure you meet eligibility requirements.
Rest assured, Robinhood uses advanced encryption and security measures to protect your personal information. Providing your SSN is standard practice.
Is it safe to invest in crypto on Robinhood?
Any investment carries risk, and that includes Robinhood‘s crypto offering. There is always the possibility of losing money. Robinhood tries to make crypto accessible, but glitches can happen during peak trading volumes.
My advice is to only invest what you can afford to lose, and do your own research beforehand on risks. Enable two-factor authentication for account security as well. There are safer ways to hold crypto than Robinhood if you are risk-averse.
Why does Robinhood require 5%/20% buffers on trades?
The buffers are Robinhood‘s way of mitigating risk and ensuring you have sufficient collateral in your account. The 5% equity buffer accounts for potential volatility that could affect the purchase price.
The 20% options buffer provides an added cushion given options represent higher risk. The buffers protect you and Robinhood in case adverse price swings occur.
What happens if I sell stock before it fully settles?
When you sell a stock position before the standard 2-day settlement period, it generates a "good faith violation" on your account. This reduces your instant deposits and can suspend your account if repeated frequently.
To avoid good faith violations, make sure stocks have fully settled or use Robinhood Gold which has no settlement period for selling stocks. Don‘t sell fractional shares until settled either.
Let‘s Go Fix That Buying Power!
As a fellow Robinhood user, I know the "not enough buying power" struggle firsthand. But now you‘ve got the knowledge and tools needed to resolve it swiftly and get back to seamless trading.
Remember, it comes down to having enough settled cash in your account to satisfy the required buffers. So deposit more money, sell positions strategically, or contact Robinhood if you think everything checks out.
Stay confident – with these tips, you‘ll be buy and selling again before you know it. Let me know if you have any other Robinhood or buying power questions! I‘m always happy to help.
Here‘s to fixing your buying power and pursuing investment success!
