You’re a swing trader but… you don’t have enough capital and suddenly, there’s a lucrative trading opportunity. Only if there was a way to solve this problem. There is! Meet Margin Trade Funding or Margin Trading Facility (MTF).
MTF empowers you to trade on leverage and buy stocks even when you do not have enough funds available. Let’s dive deeper into the concept of MTF and how it works
For instance, if you want to buy shares worth ₹1,00,000 but don’t have sufficient funds to do so, then you can pay a fraction of the total value of the share and buy the entire lot worth ₹1,00,000 using MTF.
The components involved in MTF for users include the following:
- Leverage: the loan that the broker gives you access to
- Interest: paid in exchange for the margin funding received
- Pledge: existing holdings involved as collateral
The benefits of using MTF on Dhan you ask?
- Unlimited Holding Period
- MTF Funding Estimator
- Integrated Order Flow
- Interest Free Funding Before Settlement
- 950+ Scrips
Some points should be kept in mind to avoid the risks associated with margin trade funding:
- Maintain a Minimum Balance
A trader using a margin trade facility should always maintain a minimum balance. It means a portion of your capital must always be locked in to ensure the broker’s borrowed money is paid back in case you incur any losses.
If a trader has invested in stocks through margin trading, and the trade is not leading to a good profit, it has a high probability of making the balance fall below the minimum margin and giving rise to the margin call.
- Purchase Gradually
Instead of investing all your funds at once, always buy your positions slowly over time. It will help you to manage risk in margin trading and average out the prices while trading the next round of positions.
Watch this detailed video on how to use MTF on Dhan - मार्जिन ट्रेडिंग फैसिलिटी💰Margin Trading Facility के साथ ट्रेडिंग और इन्वेस्टिंग कैसे करे? 📈 | Dhan - YouTube