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What is Margin in Intraday Trading? (Zerodha, Upstox & Angel Broking)

What is Margin in Intraday Trading?

Do you like to book profits, then you’re at the right place to know the right tactics. Just to spill the beans we are going to discuss a new way of trading facility offered by the known brokerage firms. In this article, we will cover “What is Margin in Intraday Trading. To make you understand the context of the topic, we will break the terms and then co-relate them so that you get a better understanding of the topic.

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What is Margin in Intraday Trading?

Also Read Best Dividend Paying Stocks in 2022 – What is Dividend in the Stock Market?

In our previous article, we have learned that margin is the minimum amount you pay to the broker. To secure a buy order which you cannot afford at the moment. Whereas Intraday trading refers to buying and selling of stocks on the same day before the market closes off. You draw profits from the price fluctuations happening throughout the day. The prime purpose of such trading is to earn profits through the movement of market indices.

In India, many known brokers offer Margin trading to lure customers. Therefore, margin trading allows investors the resources to buy more quantities of stock than they can afford at any point in time. Usually, the broker would lend the money to buy shares and keep those shares as collateral with them. However, you need to square off your positions at the end of every trading session. In case you have bought shares then by day end you have to sell them or vice-versa. In case you failed to do so then the broker will square off your positions in the market.

To sum up, the margin in intraday trading increases the buying power of the trader as it allows them to buy more quantities of stocks than the cash they have, while brokerage firms fill this shortfall at an interest.

Zerodha, Upstox & Angel Broking

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Also Read What is SBI Demat Account | How to Open Demat & Trading Account in SBI?

Let’s check out the margin offered by known brokers in the stock market:

ZerodhaUpto 20XUpto 1X (100% of NRML margins(SPAN + Exposure)Upto 1X (100% of NRML margins(SPAN + Exposure)Upto 1X (100% of NRML margins(SPAN + Exposure)Upto 1X (100% of NRML margins(SPAN + Exposure)
UpstoxUpto 5X on all NSE 500 StocksNAUp to 4XUp to 4XUp to 3X
AngelbrokingUpto 5XUpto to 1XUpto 1X (100% of NRML margins(SPAN + Exposure)Upto 1X (100% of NRML margins(SPAN + Exposure)Upto 1X (100% of NRML margins(SPAN + Exposure)

Also Read Record Date for Dividend and Bonus Shares in India | Why is Record Date after Ex-Date?

Example

Let’s understand how the margin works in Intraday trading. Let’s say you have a Zerodha account and choose to trade in MIS i.e. Intraday trading. As per Zerodha, they provide margin or leverage up to 20X. You place an order for 100 shares of Wipro trading at Rs.200/- then in a normal scenario, you’re supposed to have Rs.20000/- in your trading account but when you are doing margin trading then to buy those 100 shares you need to have only Rs.1000/- in your account. But ensure before the market closes you square off your position which means you sell those shares. Let says the price rose to Rs.215/- then by day end you can book profit of Rs.1500 on those 100 shares and you pay brokerage of flat Rs.20 + STT of 0.025% + Transaction charges of Exchange+ GST each on buying and selling orders.

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