6 Top Margin Funding Stocks To Buy For Good Returns For May 2022 By ICICI Direct

What is Margin Funding?

Margin is the money borrowed from the brokerage firm to buy any security and is the difference between total value of an investment and the loan amount. It is a practice wherein the borrowed funds are used from a broker for trading a financial asset and during the same the security functions as the collateral for the loan from the broker.

 

Points to note when engaging in margin trading

Margin trading can be both for intra-day trades and taking delivery positions. And as it is like trading on borrowed fund, you need to be further more careful.

In case of intra-day trades, you need to engage in putting in the stop loss as that is certainly not avoidable. There should be no effort to try and average positions if the price movement of the security works against you.

Also, keep booking profits and this way try and continue to reduce your positions.

Be responsible for the margin trading positions and set a limit on time and close out within that time limit. Also, continue to monitor your margin trading positions taken.

For margin trading, you certainly cannot put bet on stocks that are either static or too volatile.

Also, be mindful of your total cost and the breakeven for your position. There are other costs to the margin funding like administrative charge, DP charges and processing charges which are in addition to interest.

6 Top Margin Funding Stocks To Buy For Good Returns For May 2022 By ICICI Direct