What is margin trading?

What is margin trading?

Margin trading is a facility provided by stockbrokers that allows traders to buy more stocks than they can afford by borrowing funds from the broker.
This leverage helps traders amplify their profits, but it also increases their risk of losses.

Margin trading is regulated by the Securities and Exchange Board of India (SEBI) and the stock exchanges (NSE & BSE) to protect investors and ensure market stability.

How Does Margin Trading Work in India

1.Opening a Margin Trading Account (MTA)
2.Deposit of Margin Money
3.Buying Stocks on Margin
4.Maintaining Margin Requirements
5.Margin Call and Liquidation:
      a. If the investor fails to deposit additional funds, the broker can sell the securities to recover the loan.
      b. This is known as forced liquidation and helps prevent further losses.

Types of Margin Trading in India

1. Margin Trading Facility (MTF)
2. Intraday Margin Trading
3. Futures and Options (F&O) Margin Trading



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