UNDERSTANDING THE MEANING OF MTF AND HOW IT HELPS TRADERS

Understanding the Meaning of MTF and How It Helps Traders

Understanding the Meaning of MTF and How It Helps Traders

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The term MTF or margin trading facility refers to the ability to buy shares by paying only part of the total value upfront, with the balance funded by the broker. It’s like a loan for buying stocks that helps investors maximize their market exposure.



Key Points




  • Offered by brokers, regulated by SEBI (India’s market regulator)




  • Applies only to approved MTF stock lists




  • Requires interest payment on the borrowed funds




Example


If you want to buy ₹1,00,000 worth of a stock but only have ₹25,000, MTF lets you fund the remaining ₹75,000 through the broker, subject to margin requirements.




















Available funds MTF Leverage Total Exposure
₹25,000 4x ₹1,00,000




Advantages




  • Take larger positions in high-potential stocks




  • Short-term opportunities can be capitalized on quickly




  • Flexible repayment (depends on broker terms)




Conclusion


MTF empowers investors to make bigger trades with smaller upfront capital. However, understanding interest costs, risks, and margin requirements is vital before using this facility.

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