A Margin Trading App enables a trader to purchase selected stocks by paying a part of the trade value only. The rest of the amount is provided by the broker through Margin Trading Facility or MTF. In this way, traders can take a position without paying the full amount upfront.
MTF involves borrowed funds, expenses for interest and risks of the market. Traders can keep a tab on the positions, margin requirements, charges and stock details all in one place with a simple app interface.
What is a margin trading application?
A Margin Trading App is a digital platform that facilitates equity trading with margin. The trader pays an initial margin with MTF and the broker finances the rest. The shares purchased will serve as security for the amount funded.
For example, if a trader buys shares worth Rs 50,000 and the margin required is Rs 15,000, the balance amount can be funded through MTF. There is interest on the money paid in. If the stock price goes down the trader may have to put up more cash to meet the margin requirements.
The Importance of Intelligent Trading Capabilities
Because price changes will affect the value of the position, margin trading requires constant monitoring. Smart features allow traders to see key details before making decisions.
Live charts, stock alerts, watchlists, order tracking and margin reports are some of the tools traders can use to keep tabs on their trades. These characteristics don’t eliminate risk, but they do provide increased insight into trading activity.
Key Features to Consider in a Margin Trading App
A good Margin Trading App should show stocks available for MTF, margin required, amount being funded and charges applicable. Traders should be able to check this information before making an order.
Useful features are:
- Real-time price alerts and market updates
- Price valuation technical charts
- Order history and Position monitoring
- Margin availability information
- Login & Account Access
- Clear statements of the charges and interest
Traders can view their open positions and available limits on a simple dashboard.
How to use MTF using a trading app
First, open a trading and demat account with a broker who offers MTF. Complete the required KYC process and learn about the margin trading related terms.
Then turn on the MTF facility if needed. See List of eligible stocks available under this facility.
Once a stock is chosen, check the margin amount, funded value, broking, taxes and interest charges. Traders can see the total cost before they place an order.
Once you have entered the trade, watch the position closely. If the margin level is below the required level, the trader may be required to deposit additional funds or to close out positions.
Close the position ultimately according to the trading plan. Traders must not overlook margin alerts and risk limits
Example of Margin Trading
Suppose a trader uses MTF to buy shares worth ₹ 60,000. The trader pays margin of ₹ 15,000 and the broker gives the rest of ₹ 45,000. If the share price goes up the profit is calculated on the total value of the trade. Losses are also calculated on the full position value if the price goes down. The interest is on the funded amount.
This example illustrates how important it is to know the MTF rules prior to using the facility.
Bajaj Broking & MTF
Bajaj Broking provides Margin Trading Facility on its trading platform. The platform provides access to MTF enabled stocks and features like watchlists, price alerts, charts, GTT orders, basket orders and option chain tools.
Bajaj Broking can be used as a Margin Trading App if you want to trade and look for a platform to manage trades, check market information and monitor margin positions. Traders should check the latest charges, eligible stocks and applicable terms before using MTF.
Risk Factors to Consider
MTF is risky because traders are using borrowed funds. Drop in prices of stocks can increase losses. Interest will be charged until the Funded Position is closed. If the required margin is not maintained, the broker may act in accordance with its policy.
Traders should know the product, set limits and have enough money before using MTF.
Conclusion
A Margin Trading App, combining trading tools, position tracking and margin information all in one place, facilitates an MTF access. Traders can track their activity with features such as alerts, charts and reports.
MTF, however, requires careful planning and risk management. Before you take a position, it’s important to understand costs, margin rules and how markets move.
Sources
- SEBI Circular on Margin Trading Facility
https://www.sebi.gov.in/legal/circulars/jun-2017/circular-on-comprehensive-review-of-margin-trading-facility_35098.html - NSE FAQs on Margin Trading Facility
https://www.nseindia.com/static/trade/members-faqs-margin-trading-facility - Bajaj Broking Margin Trading Facility
https://www.bajajbroking.in/margin-trading-facility - Bajaj Broking Trading App
https://play.google.com/store/apps/details?id=com.msf.bfsltrade
