5paisa Margin Calculator Is a simplified margin calculator that helps you calculated comprehensive span margin requirements for F&O strategies while trading in cash, currency, commodity, and F&O before you proceed with your trade.
This comprehensive span margin calculator is aimed at offering transparency to your trading thus providing support in building a strong portfolio.
Margin in the stock market refers to the amount of equity borrowed from a broker to purchase investments. The act of ‘buying on margin’ can only be done using a margin account, an account in which the broker lends the money to an investor. The use of margin to purchase securities is analogous to using collateral for the loan and is profitable when the investor anticipates a higher rate of return than the interest on the loan.
The margin for stock exchange can be:
1. Gross exposure margin: This margin is payable on daily outstanding positions for each stock.
2. Special margin: In cases where stocks experience the undulating movement of prices, the stock exchange imposes a special margin of 25-50%.
3. Initial/ Daily margin: At the end of the trading day, brokers collect the margin payable against the open positions of the traders.
4. Mark to market margins: When the market price of a stock falls below its transaction price, the trader needs to pay the difference amount called as Mark to margin.
5. Ad-hoc margin: This is imposed on brokers with large positions or in particular illiquid low-priced stocks.