What is Margin Trading Facility (MTF) , How to Buy Stocks in delivery positions and hold for longer period using MTF?
If you wish to buy 1000 shares of STOCK A in the market, Suppose, you have a fund to buy only 300 shares, what can you do? That is where margin trading facility (MTF) and margin funding come in handy. So, how to avail Margin Trading Facility in AsthaTrade and the cost of funding in AsthaTrade.
Before we get into the discussion, you need to remember that there are two kinds of margin trading that exist in the market. Both are different and as it is a margin, you need to know the risks involved in them separately.
Margin trading for intraday purpose
This is the most common form of margin trading that is used by day traders and is well known to us. In this case, Brokers will typically give you a margin up to 6 times (after new margin rules applicable from 1st June 2021), your margin on stocks is based on the volatility of the stock and the risk involved.
To avail this intraday trading margin, you need to choose that you want to buy stock for intraday, thus these intraday trades must be closed out intraday. Normally, brokers run their open position MIS in between 3.00 pm to 3:20 pm and if the trader does not close the intraday position upto the brokers given timelines then the broker’s online RMS will close the position.
Margin funding for delivery positions
Here you take a position in the stock for delivery and you are not required to close out the position intraday.
Suppose in the case of STOCK A, you need to pay 25% margin to buy 1000 shares of STOCK A. In this case, the balance amount of pay in will be done on your behalf by your broker i.e. Astha Credit and Securities (P) Ltd. (ACS)
Of course, ACS (AsthaTrade) will charge you interest for the time period that you use the margin. The interest charges impact the expense calculation to buy any stock and your Breakeven point may vary accordingly.
Thus, you’re successful if you somehow get a lower rate of interest than others.
By choosing AsthaTrade for MTF, you won half the battle, as our focus is not to earn higher interest on client’s funding, which reduces client’s risk on trade and breakeven point.
Our interest on Funding is only 3.99% annually and will be charge only till you hold the margin funding position.
( We are not charging any interest on Funding, till 15th of August 2021 i.e. Buy and hold shares with 0% interest till 15th of August 2021).
The margin funding position will automatically get closed when the shares are sold.
Few precautions you need to take in margin trading Facility
However, here are few precautions that you must take while taking a margin trading position.
- The First thing about margin trading is to have a discipline with respect to profit booking. In this business, profit is what is booked; all else is just book profits. Keep churning your capital and try to reduce the turnaround time for your positions. That is your best bet against market volatility.
- Take ownership for your margin trading position. Don’t leave it to the broker to close out the position because the broker will close it with a program. You may not get a good price in that case. Set a time limit and close out within that time limit. More importantly, take the responsibility for monitoring your margin trading positions.
- Don’t get into a margin funding position without calculating the cost and the effective breakeven point for your position.
Margin trading and margin funding are good ways of leveraging your limited capital. But it is always better to have your precautions and safety net in place.
“Astha Credit and Securities (P) Limited offers MTF facility under the product category MTF, wherein Investors can create positions in NSE exchange“
Know more about MTF Benefits at AsthaTrade
Get upto 75% funding on your equity delivery trades
We are one of the very few Brokers in India to offer the Margin Trade Funding (MTF) facility and offering at interest rate of 3.99% per annum, which is lowest in the industry.
- You can hold on to your equity delivery positions for long periods of time and avoid auto square off on T+7 days.
- Make better use of stocks lying idle in your DP account by pledge them as margins.
- You can get upto 75% funding of your purchase value.
- The ability to invest more while having limited cash on hand enables you to take timely advantage of market opportunities
- As MTF gives you more buying power, you can spread the portfolio across a variety of shares and securities. As a result of this diversification, your portfolio investment risk gets reduced
How to start Margin trade funding in my account?
- Just activate your account for MTF.
(Need to send POA in hard copy.)
- Transfer MTF margin in cash or as stock collateral
- Select product as “MTF” from the product options when placing an order. Its that simple!
How can you avail MARGIN TRADING FACILITY?
- To avail MTF facility you need Demat account with AsthaTrade. If you have already opened this with AsthaTrade, then just click on the activate button to setup your MTF account within minutes. ACTIVATE MTF.
- If you are not our client and want to avail MTF, just OPEN AN ACCOUNT within minutes and get started on MTF.
- If you hold trading account with us but not having a Demat account with us, call us at : 0755-6693355,Email: firstname.lastname@example.org
Circular on Comprehensive Review of Margin Trading Facility CIR/MRD/DP/54/2017 .
- MTF trading in stock market is closely monitored by SEBI and Exchanges which include the eligible securities and margin required (through cash or shares as collateral) on such securities are prescribed by them from time to time.
For any Queries and Support on MTF .
Call us: 07554268599 Email: email@example.com Generate Support Ticket: Click here