How is Margin Trading different from a Cash segment transaction?
In the cash segment, settlements now occur on a T+1 basis. Here, the full exchange of payment and shares takes place between the buyer and seller. Margin Trading, on the other hand, involves trading with borrowed funds, allowing for potentially larger positions with a smaller capital outlay. Trades must be squared off within the day or as per the agreed terms.
Related Articles
What is Margin trading?
In a normal transaction, to buy shares you need 100% of the value in cash and to sell shares you need 100% of the quantity available in your Demat account. With margin trading, you use leverage on your available funds or securities to trade positions ...
What is Margin Amount in Trading?
To trade in Futures and Options segments, a small upfront amount is required. Brokerages provide the leverage on this margin amount as per their policies. Margin amount is the minimum percentage of the total transaction value which is required in ...
What happens to my margin if the stock moves against my favour?
The margin amount is blocked to safeguard against adverse price movements. However, the amount blocked as margin at the time of the transaction would be slightly greater than the minimum stipulated margin requirement to undertake the trade. This is ...
What are the Do’s and Don’ts for Trading on the Stock Exchanges?
Click here to read about the Do’s and Don’t for trading on the exchanges for Traders/Investors. Click here to read about the Do’s and Don’t for trading in Commodities segment.
How can I prevent my open positions from being squared off due to Margin Shortfall?
Since, the square off process is triggered when the available margin is less than the required margin, providing additional margin will ensure that sufficient margins are available in case you face losses. You can add funds according to the ...