Margin trading is a facility offered by brokers whereby you can buy shares by paying only a portion of the total value initially. The balance is taken on loan from the broker on which you need to maintain a margin (a combination of cash and securities). This, in turn, gives you leverage and enables you to take larger positions than your operating capital would allow.

How margin requirements work

Margin trading is regulated by SEBI in India, and the minimum margin will be 25% of the value of the trade, but it can be different depending on the stock. You can use cash to fund or as margin. Your broker will call a margin when the stock goes in the wrong direction and your margin balance falls below the limit, and it will require you to build up funds quickly.

Interest on borrowed funds

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