Margin trading facility with 4X leverage

In this article, we will discuss

• What is a Margin Trading Facility? 
• What is Margin Trading Facility and How Does it Work? 
• What Makes Margin Trading Facility a Must-Have Feature For Traders? 
• How to Activate Margin Trading Facility From Your Samco Trading App? 
• How to Determine the MTF Leverage Applicable for a Stock? 
• Key Things You Need to Know About the Margin Trading Facility of Samco Securities 
• Conclusion

The Indian stock market offers plenty of exciting opportunities for short-term wealth creation. However, despite the availability of trading opportunities, many retail traders are seemingly tied down by a lack of capital. This severely limits their ability to participate in the markets, often leading to disinterest.

To solve this need for funds, we at Samco Securities, came up a margin trading facility with unique features and benefits. If you’re wondering what Margin trading facility is, how it works, and the various benefits it offers, here’s a comprehensive guide that can help you understand the product better. But before we look at Margin trading facility, you need to first understand what it is.  

What is a Margin Trading Facility? 

Offered by stockbrokers, margin trading facility or MTF, enables you to enter into large trades by just depositing a fraction of the trade value as a margin. The remaining funds required to execute the trades are offered by the stockbrokers, who in turn levy a nominal interest rate on the amount you borrowed. The interest on the borrowed amount is levied daily up until the day of repayment.  

What is Margin Trading Facility and How Does it Work? 

Margin trading facility is offered by Samco Securities Limited, where you can get up to 4X leverage on equity delivery trades. This facility is currently available for more than 500 stocks listed in the Indian stock market. 

With Margin trading facility, you can enhance your purchasing power by up to 4 times, meaning that you can purchase stocks worth Rs. 40,000 on a delivery basis by simply depositing Rs. 10,000. If you’re a short-term trader with limited capital, MTF trades with Margin trading facility can be very useful since it essentially maximises your return generation potential. 

Here’s a hypothetical example to help you understand how leverage trading with Margin trading facility works. 

Let’s say you have Rs. 50,000 and wish to purchase a stock currently trading at Rs. 1,000. With just your capital alone, you can only purchase 50 shares (Rs. 50,000 ÷ Rs. 1,000). Now, let’s say the stock price increases by Rs. 30 to become Rs. 1,030 per share. In that case, you will be able to sell the shares for a total of Rs. 51,500 (Rs. 1,030 x 50 shares). This means your profits will only be Rs. 1,500 (Rs. 51,500 — Rs. 50,000). 

Now, with the margin trading facility offered by Samco Securities, you get up to 4X leverage for equity delivery trades. This effectively means that you can enter into positions that are four times larger than what your current capital would allow. 

So, with a capital of Rs. 50,000 as in the example above, you would be able to purchase shares worth up to Rs. 150,000 with Margin trading facility. Since you would now own 150 shares, if the price per share increases to Rs. 1,030, your total sale value will be Rs. Rs. 154,500 (Rs. 1,030 x 150 shares). Correspondingly, your profits would be Rs. 4,500 (Rs. 154,500 — Rs. 150,000).

As you can see, with Samco’s Margin trading facility, you were able to enjoy additional profits.

What Makes Margin Trading Facility a Must-Have Feature For Traders? 

Margin Trading Facility by Samco Securities offers a plethora of benefits that make it a must-have feature for traders. Here’s an in-depth overview of the various advantages you get to enjoy when you subscribe to the facility. 

• High Leverage 

Samco’s MTF trade facility - offers high leverage of up to 4X on certain stocks when purchased on a delivery basis. This enhances your overall profit generation potential by enabling you to control positions that are four times larger than what your capital allows. 

• Nominal Interest 

Margin Trading facility of Samco Securities, lets you borrow funds at a low-interest rate of just 0.05% per day (18% per annum). The interest on the borrowed amount is calculated and levied each day. 

For example, let’s say you avail of the Margin trading facility to purchase a particular stock. You purchase a stock worth Rs. 80,000 by depositing Rs. 20,000 as a margin. The remaining Rs. 60,000 is funded by Samco Securities at a very nominal interest rate of just 0.05% per day. 

Assuming you hold the stock for 20 days, the interest you need to pay on the borrowed amount would come up to Rs. 600 [(Rs. 60,000 x 0.05%) x 20 days]. The interest would be automatically deducted from your ledger balance. 

As you can see, the interest cost after using MTF is very minimal and is far outweighed by the benefits you get to enjoy.   

• Unlimited Holding Period 

Most stockbrokers impose a limit on the holding period of stocks bought through the margin trading facility. Depending on the stockbroker you opt for, the holding period may vary. But generally, the maximum holding period is 365 days from the purchase date. Once this holding period limit expires, you’re mandatorily required to liquidate your MTF stock holdings. 

With Samco’s MTF, however, there’s no limit on the holding period of MTF stocks. This effectively means that you can hold the stocks purchased through this facility for as long as you wish provided you pay interest and adhere to all the margin calls, if any, on time. Even long-term traders intending to hold stocks for years can make use of the MTF, offered by Samco Securities.        

• Zero Paperwork and Instant Activation 

Availing the Margin trading facility on the Samco trading app is very easy and doesn’t require any paperwork. All you need to do is log in to your trading app and activate your subscription to the service. Once you subscribe, the facility will be activated in 24 hours and is available for life.  

• No MTF Charges 

One of the major advantages of Samco's Margin trading facility is that there are no MTF charges levied for availing the service. Apart from the interest on the borrowed amount and a nominal charge of Rs. 1, which is debited from your ledger, you’re not liable to pay any other fees or charges.  

• Large Stock Selection 

The margin trading facility offered by Samco Securities is available for an extensive list of more than 500 stocks listed on both the Bombay Stock Exchange (BSE) as well as the National Stock Exchange (NSE). 

The comprehensive selection of stocks includes large-cap, mid-cap and small-cap companies across different sectors and industries. You can visit the Margin trading facility section of the Samco Securities website for the complete list of stocks that are available for leverage trading. 

How to Activate Margin trading facility From Your Samco Trading App? 

Now that you’re aware of Margin trading facility, how it works and the various benefits it offers, here’s a quick preview of the process you need to follow to activate the facility. 

• Step 1: Download and Install the Samco trading app on your smartphone. 
• Step 2: Log into the app using your user credentials. 
• Step 3: On the dashboard, tap on the ‘See Your Profile’ option located at the top of the app. 
• Step 4: Scroll down the list and click on the ‘Manage My Subscriptions’ option. 
• Step 5: Tap the Margin trading facility Subscription option. 
• Step 6: Carefully read through the information listed on this page and click on the checkbox located right next to the ‘I agree to and accept the Terms and Conditions of the product.’
• Step 7: Then, tap the ‘Subscribe Now’ button. 
• Step 8: A prompt will appear stating that Rs. 1 will be debited from your trading account. Click ‘Yes’ to proceed. 

That’s it. Once the amount is debited, you will be subscribed to the Margin trading facility for life and can start placing equity MTF trades on a delivery through your trading account right away. 

How to Determine the MTF Leverage Applicable for a Stock? 

As a trader subscribed to the Margin trading facility, it is natural to want to know the amount of leverage you can avail for a stock. Here’s where the MTF Leverage Calculator can help. 

Available on Samco’s website, the calculator displays the list of stocks available for MTF trades, the leverage available for a particular stock and the margin you need to deposit. 

Here’s a quick overview of the steps you need to follow to determine the MTF leverage applicable for a stock. 

• Step 1: Visit the official website of Samco Securities. 
• Step 2: Hover your cursor over the ‘Products’ option on the homepage. 
• Step 3: Click on the ‘Leveraged Products’ option and then on ‘Margin trading facility’. 
• Step 4: Scroll down to the MTF Leverage Calculator section of the webpage. 
• Step 5: Choose a stock for which you would like to know the leverage on offer. You can select the stock from the list or search for it using the built-in search bar. 
• Step 6: The calculator will display details like the stock’s name, current market price (CMP), leverage on offer and the percentage of trade value you need to deposit as a margin. 
• Step 7: Click on the ‘Calculate’ button beside the stock. 
• Step 8: Enter the amount of cash you’re willing to deposit as a margin. Here, you can also manually enter the stock’s price. 

That’s it. The calculator will instantly display the funding amount, the total exposure, and the maximum quantity of shares you can purchase. 

Key Things You Need to Know About the Margin Trading Facility of Samco Securities 

As a trader, there are a few things you need to be aware of before you use the Margin trading facility feature offered by Samco Securities. Let’s look at what they are. 

• Available only for Equity Delivery Trades 

The up to 4X leveraged trading offered by Samco’s, a margin trading facility, is only available for the equity delivery segment. You cannot use this facility to trade in any other segment like intraday, futures, options or commodities. 

• Margin Shortfalls 

If the value of your shares purchased via an MTF trade declines, you may be required to deposit an additional margin to cover the shortfall. In cases where there is a margin shortfall, you will receive margin call notifications via the Samco trading app, SMS and email. If you don’t meet the additional margin requirements by depositing more funds into your trading account, your existing open positions may be automatically squared off. 

• Conversion of Intraday Positions to Margin trading facility

You can convert any open intraday position to a Margin trading facility position before the automatic intraday square-off takes place (3:15 PM) provided the stock is eligible for MTF. To convert an intraday position to a Margin trading facility position, all you need to do is use the Position Conversion window of Samco’s trading portal and choose the ‘NRML’ product type. 

• Conversion of Margin trading facility Positions to Cash And Carry (CNC) 

Similarly, you can also convert your existing margin positions to Cash and Carry (CNC). However, before you initiate this conversion, you need to first ensure you have enough funds equivalent to the entire trade value in your trading account. Once you have enough funds, you can simply use the Position Conversion window to convert an ‘NRML’ trade to a ‘CNC’ trade. 

Conclusion

To put it in simple terms, the margin trading facility of Samco Securities enables you to effectively maximise your return generation potential by borrowing funds to increase your purchasing power. It is a highly useful feature that can be used by term traders looking to capture short-term price movements and long-term investors wanting to create wealth. 

That said, while leveraged trading through Margin trading facility offers a host of benefits, it is important to remember that it can also multiply your losses if the market moves against you. Therefore, it is advisable to first fully understand the risks involved with margin trading before using the facility. 

The Margin trading facility is available for subscription to all Samco customers for a nominal one-time fee of just Rs. 1, which is debited from your Samco ledger. Once activated, the facility is available for life and can be used at any point in time. So, what’re you waiting for? Open a trading accont with Samco Securities today and experience the power of leveraged trading with the margin trading facility. 

Disclaimer: INVESTMENT IN SECURITIES MARKET ARE SUBJECT TO MARKET RISKS, READ ALL THE RELATED DOCUMENTS CAREFULLY BEFORE INVESTING. The asset classes and securities quoted in the film are exemplary and are not recommendatory. SAMCO Securities Limited (Formerly known as Samruddhi Stock Brokers Limited): BSE: 935 | NSE: 12135 | MSEI- 31600 | SEBI Reg. No.: INZ000002535 | AMFI Reg. No. 120121 | Depository Participant: CDSL: IN-DP-CDSL-443-2008 CIN No.: U67120MH2004PLC146183 | SAMCO Commodities Limited (Formerly known as Samruddhi Tradecom India Limited) | MCX- 55190 | SEBI Reg. No.: INZ000013932 Registered Address: Samco Securities Limited, 1004 - A, 10th Floor, Naman Midtown - A Wing, Senapati Bapat Marg, Prabhadevi, Mumbai - 400 013, Maharashtra, India. For any complaints Email - grievances@samco.in Research Analysts -SEBI Reg.No.-INHO0O0005847