Hello Traders,
Just posting a quick post about understanding Margin Requirements on Dhan.
Many times we end up getting posts / screenshots from users comparing margin requirements on Dhan with other stock trading platforms, where it is highlighted that margin requirements on Dhan are higher than the other platforms. This is post to understand how Margin Requirements on Dhan are displayed.
Margins are important for traders, everything a trader does - getting into a position, managing a position, risk reward on every trade depends on how much margin is used on every trade. At Dhan, we take this seriously and for that reason over the past few days our team and also I personally spent some time on this, just to ensure that we are doing things the right way for our traders on Dhan and there are zero ambiguity on how margins are displayed to users.
Here are few things we want to highlight about how Margins are displayed on Dhan…
-
Margins change from time to time, particularly for F&O Indices & Stocks and on Dhan the Margin Required displayed on the Order Placement Screen are real time - ‘at that moment’ the ‘exact margin requirements’ for that trade if it were executed on exchanges.
-
As F&O contracts, particularly F&O Stock Options contracts & also Commodity contracts near the expiry, the margin requirements of same change with additional margins being blocked over and above the regular margin. (Explained in depth on Dhan’s Risk Management Policy - Risk Management Policy | Dhan)
-
In case on Dhan, the Margin Estimator on the Order Placement windows and also Baskets, Strategy Builders, and all such places where Dhan displays the Margins Required for trade - these are always updated in real-time with the Actual Margins required - inclusive of the additional margin requirements close to Expiry.
-
What we realised that most platforms, including some of the large ones - continue to show lower margins (without additional margin requirements) on their respective order placement screens, however when the orders are actually placed - they are either rejected or nudge the user that there will be additional margins blocked beyond what is initially displayed.
-
At Dhan, we believe in being super transparent about the ‘final margin requirements’ for trades and show this upfront for users, v/s showing a upfront lower margin and getting users tricked to believe that the margins are lower + but eventually when user puts a trade, either reject them or nudge them or block additional margins from available margin, either from cash or collateral.
-
For Dhan, if margins were to change on basis of contracts being ITM / ATM / OTM - same reflect on a real-time basis for margins, unlike other platforms where upfront margins remain basic same at all times and additional margins are communicated on order placement or later blocked.
-
Beyond this, to state simply - margins are calculated as per Exchange Requirements and the required margin is Span + Exposure, which is displayed by Dhan. We understand that some broking platforms artificially show a lower margin by reducing option premium to be received thereby giving a view that margins required are less. In case of Dhan, the premium to be received, will be realised on T+1 day and the amount is credited directly in the ledger.
-
Dhan also has Transaction Estimator that shows amongst all important things, Break-Even Price of any trade you take. We get this many times that Net P&L on Dhan estimator is lower than some of the other platforms, while we analysed this - we realised that many platforms that have Brokerage Estimator do not show Net P&L, or if they do at times important charges like DP charges or one or more statutory fees are not considered in the said calculations.
-
Dhan possibly is also the only platform where every trade-able scrip / stock across all platforms - Mobile or Web has a dedicated Margins section where it shows all margins available on that scrip, in real-time with the leverage on same - be it Intraday, MTF, Pledge, Normal or a Carry Forward position. We showcase margins directly from our RMS (risk management systems) and ensure they are known to you for every trade.
-
When we met Traders in our early journey, we took lots of feedback from them understanding their needs about Margins, and build a lot of things specially for Traders. I had written a detailed post on same here - Full post: Margin Benefits & Pledge Shares Experience for Trading on Dhan
-
Additionally, it is also important to understand that these margins displayed on Dhan for combined Option Strategies (in baskets, custom strategy builder, pre-defined strategies, etc) will also at all times show updated margins. Which in case of other brokers, the combined margin requirements for a strategy or basket that is displayed may be lower because of how margins are treated on respective platforms.
While we write this post to state how Margin Requirements on Dhan are handled, we emphasise once again that Margin Requirements across all Stock Broking platforms are now more or less the same - while some platforms choose to display the margins in own creative ways, at Dhan we prefer being super transparent and Margins at all-times reflect the most real-time and updated values across all instances.
That said, we continue to receive feedback on specific use-cases about margins, have worked on them in past and will also do in future. There are lot more things we are working on margins management and so on - our journey continues with you in making Dhan better everyday.
Unlike most of the broking platforms that have a third-party OMS (Order Management System) / RMS (Risk Management System), Dhan now has its own Trading System and processes over 99%+ of trades on Dhan now move through our own Trading System that we built in-house on latest technology stack in less than 12 months. This gives us super flexibility in shipping core products & capabilities much faster to you and also makes us one of only Stock Trading platform that owns and manages its entire technology infrastructure including core trading systems.
While we are an extremely small player and early platform - everyday (even now) we receive over 250+ feedbacks, suggestions, comments from our users. Our team, including me personally go through each of it and try our best to do incorporate that in building Dhan.
Thank you
Pravin