what is margin trading & what is buying on margin
Margin Trade With margin trading, you can buy a big lot of shares despite not having enough funds to afford the same by borrowing the funds from your broker. This can be done by paying a margin, which is a small part of the total value of the shares bought. This margin can be settled later when you square off the position. If your profit is higher than the margin, then you make a profit on the trade else you lose money. The amount of margin paid and the repayment duration varies for different stock brokers. But for margin trading, you need to first open a margin account with your broker. To open a margin account, you need to place a request with your broker and might require you to pay an amount beforehand. This amount paid to open a margin account is called minimum margin. You have to maintain this minimum margin throughout in your margin account. In case you fail to maintain the minimum margin in the account, the trade automatically gets squared off. Squaring off is mandat...