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Wednesday, 9 September 2015

What is margin trading in India?

Consider a scenario where in you know for sure that Tata Steel stock price is going to soar and you want to make money out of it. More you invest in this stock, more you will earn! But the problem is that you have just 1 lacs in your account. You can only buy shares worth 1 lac Rs.

Is there any solution to above problem? Yes - that's when margin trading comes into picture.
Margin trading allows you to buy shares worth more than your account balance. So in above case, you could be allowed to buy shares worth more than 1 lacs Rs. (may be up to 3 lacs).

Different stock brokerage houses have different margin rules. You should also note that margin trading could be very risky. You will have to square off your position before settlement cycle completes otherwise your position will be squared off automatically.

What do you think on this topic? Please express your opinion or ask any question through comment below. You can write to me at reply2sagar@gmail.com

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