How to activate Margin Trading Facility?
Just like you activate your online trading account by changing the password after logging in, you also need to activate margin trading facility. Of course, this is a one-time activity and once your margin trading is activated, you are good to continue trading on margins. You can activate margin trading facility in any of the permitted methods. Normally, you are allowed to activate the facility by either sending an email from your registered email id, or by calling up from your registered phone to your equity advisor or to the official call centre number. In addition, you can also log into the online trading account on your PC or laptop and activate margin trading facility, just as you can also activate margin trading with your mobile app.
Remember that margin trading activation is an important first step for you to start placing margin orders. Once the margin trading activation is done, you can place margin orders by selecting the appropriate order header and the concessional margins are automatically applied to you.
HOW DO I ACTIVATE MARGIN TRADING FACILITY?
Remember that the margin trading facility requires you to activate margin trading facility once at the beginning. You donâ€™t need to do it each time. There are various ways of activating your margin trading.
By sending email from your registered email id with margin activation request and quoting other relevant client code and demat code.
By sending a written signed letter to activate the margin account
The activate margin trading facility can be done even by making a phone call to your equity advisor from your registered mobile or land line number.
Similarly, the margin trading facility can also be activated by just calling the call centre, which is normally a toll-free number, and authenticating yourself.
Activation of margin trading facility can also be done by logging into your trading account using your internet password authentication and making a request
Lastly, you can also use your downloaded trading app and log in through your mobile to make the activate margin trading facility request.
HOW TO OPEN A MARGIN TRADING ACCOUNT?
You can use your regular trading and linked demat account to activate the margin trading facility. The activation is normally done with 24-48 hours and once that is done then the value of shares in the linked demat account automatically become eligible as margin based on the previous day closing value of the stocks. Any dividends received during this period will be automatically credited to your linked bank account and there is no separate request or formality required for the same.
Remember that once the margin account is opened, then the interest is only charged on the amount of debit that stands to your trading account. If the trading account is having a credit then there is no interest charged for the margin trading facility so it almost operates like an overdraft facility. The only requirement is to ensure that when you select the buy button, also select that it is a margin trading buy and then the rules of MTF are automatically applied to the trade. There is nothing else that you need to do.
BENEFITS OF MARGIN TRADING ACCOUNT
Here are some of the key benefits of having a margin trading account. Of course, you need to activate margin trading facility first. Let us now move over to the benefits.
- Margin trading is ideal for investors who are looking for the opportunity of short term price movement but do not have sufficient cash balance. Here, margin trading can fill the gap and provide liquidity.
- If shares are lying idle in your demat account, the margin trading facility is a good way of utilizing or leveraging stocks available in your demat account. These shares can be offered as collateral margins to take MTF positions in the equity market.
- Margin Trading can help you to Improve the percentage return on the capital deployed, or in short, improve your ROE. When you are trading on margins, you only pay around 25% of the cost. So, if the price moves up 5%, it is a 20% ROE gain for you.
- Many times, investors miss out on very lucrative buying opportunities just because they not have the liquidity available with them. In such cases, the margin trading facility can help you to capitalize on these opportunities and enhance your corpus.
- Even though you are borrowing, you are only using the loan to buy an appreciating asset like equity which creates wealth in the long run. That is good economics or positive EMI if we may call it so.Related Tags#margin trading activation#activate margin trading facility#india infoline