Margin trading enables investors to assume bigger stakes with collateral, but it is also accompanied by risks when it is not handled in the right manner.

Imagine you want to buy a smartphone that costs ₹ 25,000. You’ve only ₹ 20,000 with you. Your friend funds the shortfall of ₹ 5000, allowing you to purchase the phone. In the world of trading, margin funding works on similar lines. Here, your broker gives you the funds to buy the securities you want.

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Margin trading is a world where opportunity and risk coexist. Every decision carries the potential to make or break a portfolio. Let's see what a day in the life of a margin trader could look like to understand the risks involved with margin trading.

Calculating margin trading interest requires you to know the amount borrowed, the duration until which you intend to utilise the funds, and the rate of interest charged by your broker.

A margin trading facility is a key offering from brokers that allows you to borrow funds from them and trade. You can do this when you do not have enough money in your account or borrow additional funds to trade. If used with prudence, margin trading can offer several advantages. What are these? Let us find out.