What is margin in trading?

Margin is the amount of money a trader needs to deposit with a broker to open a leveraged trading position.

How is margin calculated?

Margin = (Lot Size x Price) / Leverage. The margin varies based on the asset and leverage used.

Why is margin required?

Margin acts as a security deposit to cover potential losses in leveraged trading positions.

Is margin trading risky?

Yes, margin trading amplifies both profits and losses. It's important to use it with proper risk management.

Margin Calculator - Required Margin & Leverage

What is Margin?
Formula Used
Example
Benefits
FAQs

What is Margin?

Margin is the collateral a trader deposits to control a larger position using borrowed funds from the broker. It allows traders to leverage their capital and amplify gains (and losses). Margin trading is common in stock markets, forex, and commodities.

Formula Used

Margin Required = (Trade Size x Asset Price) / Leverage

Example

Suppose you're trading 100 shares of a stock priced at Rs. 500 with 5x leverage:

Trade Size = 100 shares x Rs. 500 = Rs. 50,000
Leverage = 5x
Margin = Rs. 50,000 / 5 = Rs. 10,000

So, you'll need Rs. 10,000 as margin to take a Rs. 50,000 position.

Benefits

Enables higher exposure with less capital
Useful for intraday and short-term trading
Can maximize returns in trending markets

Frequently Asked Questions (FAQs)

Is margin trading safe?

It carries risks. Use proper stop-losses and risk management strategies.

How much margin is needed for intraday trading?

It depends on the broker, stock, and leverage offered�often much lower than delivery trades.

Can margin lead to losses greater than my investment?

Yes, leveraged losses can exceed your margin if the market moves against you.