What is MTF (Margin Trading Facility)?
What is MTF (Margin Trading Facility)?
Blog Article
MTF (Margin Trading Facility) is a service offered by stockbrokers that allows investors to buy stocks by paying only a portion of the total trade value upfront. The remaining amount is funded by the broker, effectively giving the investor leverage on their capital.
???? How Does MTF Work?
Let’s say you want to buy ₹1,00,000 worth of shares but only have ₹25,000. With MTF, you can use your ₹25,000 as margin, and the broker will fund the remaining ₹75,000. You can then hold the position over multiple days, unlike intraday trading which requires same-day settlement.
✅ Benefits of MTF
Increased buying power with limited capital.
Flexibility to hold positions for a longer period.
Opportunity to maximize returns during bullish trends.
⚠️ Things to Keep in Mind
Interest charges apply on the borrowed amount. Use an MTF charges calculator to estimate costs.
Only selected stocks (MTF stocks) are eligible under this facility.
Risk of higher losses due to leverage.
???? Final Thoughts
MTF is a powerful tool for experienced traders and investors looking to amplify their returns. However, it’s crucial to pick strong stocks, monitor charges, and manage risk efficiently to make the most of this facility.
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