Margin trading facility is a service offered by stockbrokers that allows you to take positions in securities by paying only a portion of the total trade value. The broker funds the remaining amount, enabling you to increase your purchasing capacity in the stock market.
Instead of relying only on your available capital, you effectively trade using borrowed funds while providing collateral or margin as security. The broker charges interest on the borrowed amount until the position is closed or the funds are repaid.
For example, suppose you want to take a position worth ₹1,00,000 but have only ₹40,000 available. The margin trading facility may allow you to contribute that ₹40,000 while the broker funds the remaining ₹60,000. The securities purchased through the transaction typically remain pledged as collateral for the borrowed amount.
This structure enables investors to participate in larger trades without deploying their entire capital immediately.
