Margin buy and margin sell in ICICIDIRECT part 3 – margin trading ICICIDIRECT MARGIN BUYSELL.
Margin buy and margin sell in ICICIDIRECT part 3 – margin trading ICICIDIRECT MARGIN BUYSELL.
ICICI Direct offers various margin trading facilities that enable investors to amplify their trading capacity by leveraging funds beyond their immediate capital. Here’s an overview of the key margin trading options available:
Contents
1. Margin Trading Facility (MTF)
The Margin Trading Facility allows investors to purchase stocks by paying only a fraction of the total transaction value upfront, with the remaining amount financed by ICICI Securities. This facility enhances purchasing power, enabling investors to seize market opportunities without immediate full capital outlay.
Key Features:
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Increased Leverage: Investors can enhance their buying power up to four times their available funds.
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Flexible Holding Period: Positions can be held for up to 360 days, offering flexibility in investment strategies.
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Competitive Interest Rates: Interest rates are as low as 9.69% per annum on the funded amount.
Example:
If an investor wishes to purchase shares worth ₹1,00,000 but has only ₹25,000, they can utilize the MTF to fund the remaining ₹75,000. Interest is charged solely on this funded amount.
This facility permits investors to pledge their existing shares to generate trading limits, effectively using their portfolio as collateral to fund new trades. This approach allows for cashless investing, optimizing the utilization of existing assets.
Key Features:
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Leverage Existing Holdings: Use current shares to create trading limits without liquidating positions.
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Immediate Fund Access: Quickly generate limits to capitalize on timely market opportunities.
Process:
Investors can pledge their shares through the “Shares as Margin” feature on the ICICI Direct platform, creating instant trading limits.
3. Intraday Margin (Margin Plus)
For intraday traders, ICICI Direct offers the Margin Plus facility, providing higher leverage for same-day buy and sell transactions. This facility includes integrated stop-loss orders to mitigate potential losses.
Key Features:
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Enhanced Leverage: Amplify trading capacity for intraday transactions.
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Risk Management: Mandatory stop-loss orders help limit potential losses.
Example:
An intraday trader can enter larger positions with a fraction of the total trade value upfront, with the broker funding the remaining portion.
Interest Rates and Plans
ICICI Direct offers various plans with differing interest rates for margin trading facilities. For instance, under the ICICI Direct Prime Plan, interest rates can be as low as 9.69% per annum, depending on the chosen plan.
Important Considerations
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Interest Calculation: Interest is calculated daily on the funded amount and is charged monthly.
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Margin Requirements: A minimum upfront margin of 20% of the transaction value is required to trade in the cash market segment.
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Pledged Securities: Investors can sell securities pledged as margin. A ‘Spot Sell’ option is available under the ‘Shares as Margin’ section, allowing for the sale of pledged securities.
For a practical demonstration of utilizing the Margin Trading Facility, you can refer to the following video:
This video provides a step-by-step guide on executing margin trades using the ICICI Direct platform, offering valuable insights for both new and experienced investors.
By leveraging these margin trading facilities, investors can enhance their trading strategies and potentially increase returns, while effectively managing risks associated with leveraged trading.
