How is Margin Trading different from a Cash segment transaction?
Understanding the difference between cash segment trading and margin trading is important when choosing how to invest or trade. While both are modes of buying and selling securities, they differ in settlement timelines, capital requirements, and leverage.
Key Differences
| Feature | Cash Segment | Margin Trading |
|---|
| Capital Requirement | 100% upfront payment required | Only a fraction of the capital is required (leverage) |
| Settlement Timeline | T+1 basis – shares and funds settle by the next trading day | Trades may remain open but typically must be squared off the same day or rolled over with interest |
| Ownership | Buyer takes full delivery of shares | Shares are not delivered until position is settled |
| Risk Profile | Lower risk | Higher risk due to leverage exposure |
Summary
- Cash Segment: Involves full payment and actual delivery of shares. Settlements follow the T+1 rule set by exchanges.
- Margin Trading: Lets you take larger positions with less capital by borrowing funds from the broker. Comes with the responsibility to square off the trade or maintain required margins.
For Further Reading
Refer to our detailed guide on What is Margin Trading? to understand mechanics, eligibility, interest, and risks.
What If...
| Scenario | What You Can Do |
|---|
| You’re unsure which method to use | Use the cash segment if you're investing; margin if you're day trading with strategy. |
| You can't maintain margin | Your position may be squared off—monitor margins regularly. |
| You want to convert a margin trade to delivery | Place a request to convert it through the platform before cutoff time. |
Tip: Margin trading amplifies both gains and losses. Ensure you’re well-versed with the risk involved before opting in.
Last updated: 18 Jun 2025
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