Minimum to invest

To avoid unfilled orders, we recommend investing a minimum of $2500 across your portfolio. Margin is enabled on Alpaca for accounts with over $2000, and we regularly use small amounts of margin to fully execute buys/sells that would not be filled without access to margin. Margin makes it possible for us to utilize 100% of your portfolio. We suggest a buffer of at least an extra $500 (bringing up the portfolio minimum to $2500) to maintain margin in case one or more of your symphonies loses value.

Because of volatility in the market and transaction fees, in order for us to execute a trade using the percentage allocations in a symphony, we sometimes need to place a buy order that’s slightly more than what your cash balance is in your portfolio. This amount is very small (generally <$1) and is unlikely to lead to margin calls or any of the other dangers that come with leveraged trading—however, without it, we’d consistently be under-allocating your funds, losing potential returns. It also can cause the entire trade to fail, leading to a failed rebalancing.

Buying power: how it works in practice

Buying power is the amount of money an account has to purchase assets. It’s commonly calculated as total cash, plus the amount of margin available. Without margin, buying power is just the net cash amount.

Think through an example where you’re investing in 2 assets (asset A and asset B), that are weighted at 50% in each, you have $1000 in each, and you’re planning to execute the symphony monthly. Imagine asset A goes up by 10%, making its nominal value $1100, and asset B goes down 10%, making its nominal value $900. Your portfolio is now weighted 55% asset A and 45% asset B, so when the designated trading period comes around, we’ll sell $100 worth of asset A and use that to buy $100 worth of asset B.

Unfortunately, it isn’t this simple in practice. Because of fees and slippage associated with order execution, you may have slightly less than $100 after the sell of asset A, which means we’ll buy less than $100 of asset B.

Access to margin allows us to close this gap, and execute the trades fully, allowing you to stay fully allocated in the assets you’ve selected.

What happens if I invest less than $2500?

We currently have a required minimum of $50 in each symphony, which makes it possible to invest with less than $2000 in your account, but restricts your account’s use of margin. In this case, you’ll likely experience some of your portfolio being left in cash, missing out on exposure to the assets you’ve selected.

We also run into issues with accounts that begin with a balance of exactly $2000, as daily fluctuations can bring the amount under $2000, disallowing the use of margin. This is why we recommend investing at least $2500 in your portfolio, allowing for more efficient trades and full exposure to the symphony you’ve selected.

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