What Is Margin Trading?
Margin trading is a knack under which you purchase stocks that you can’t impart. You are permitted to buy stocks by remunerating a marginal amount of the genuine worth. This margin is reimbursed either in cash or in shares as protection. It can be deemed influencing positions in the market, either with money or security by shareholders. Your broker funds your margin dealing proceedings. The margin can be fixed later when you settle your position. You make a profit when the profit gained is much higher than the margin, else you bear a loss.
Features of Margin Trading
permits shareholders to influence positions in securities not from the auxiliaries segment.
- Only approved brokers can proffer margin trade accounts as per SEBI regulations.
- SEBI and individual stock exchanges predetermine collaterals that are margin traded.
- Investors can develop positions against the margin in cash or securities through shares.
- The margin-developed positions can be deferred to a maximum of N+T days, where N is the number of days that said part could be rolled forward; this fluctuates across brokers, and T is the trading days.
- Investors determined to use the margin trading facility should develop an MTF account with their brokers by consenting to the terms and conditions and stating they are aware of the benefits and risks.
Benefits of Margin Trading
- Aappropriate for those investors looking at cashing on the price fluctuations over a temporary but do not have sufficient cash in hand.
- Collaterals in the portfolio or demat account can be employed as a security/collateral.
- MTF facilitates the rate of return on the capital invested.
- MTF increases investors’ buying power.
- The market watchdog and stock exchanges endlessly monitor the margin trade facility.
MTF disclaimer “Margin Funding as subject to the provisions of SEBI Circular CIR/MRD/DP/54/2017 dated June 13, 2017 and the terms and conditions mentioned in rights and obligations statement issued by the Angel One Limited”