An act of borrowing money from a broker to trade stocks, selling the stocks with a profit margin and settling the broker after a successful trade is termed as Margin Trading.
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How to start Margin Trading?
- Request for a Margin Trading account
- Get yourself registered and verified
- Deposit an amount as Minimum Margin in your account
- Get the additional amount
- Trade stocks of your choice
- Maintain the Minimum Margin
- Close the trade at the end of the session
- Square off the trade by settling the broker
- Cash out your profit
How to do Margin Trading?
This mode is purely for those who look for trading in short term and don’t have enough cash to support their trade. If the market understanding is convincing and you expect a profit with a specific amount, there is nothing better than Margin Trading.
Profit is acquired through buying a stock for a price and selling it for a better price. Look at the instance given below to understand the holistic process of Margin Trading.
You have $10 to trade. Assume that Tesla offers one share for $1. With your capital, you can get only 10 shares. However, you want to get 50 shares. Through a Margin trading account, you can avail $40 (80% of your entire trade value). With the total of $50, you can trade 50 shares of Tesla.
If the Tesla share value goes from $1 to $2, you would get $100 ($50 x2). Then, at the end of the trade, you settle the broker his $40 and his fees of $1. Take out your initial deposit of $10. The remaining $49 is your profit from the trade.
Without using the Margin trading account and with just your capital of $10, you would get the final profit of $10.
Key Advantages of Margin Trading:
- Best option for short-term
- Better returns, ahead of inflation
- Improved rate of return
- Greater purchase power
- Flexible payment schedules
- Profitable returns
You can start Margin Trading, by opening your free account in just 4 minutes. You are just a click away from joining the best site for Margin Trading.
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