Wednesday, 13 March 2013

Margin Trading

In previous post we talked about Equity trading which is less riskior and you can hold stock till you want. The other type of stock trading is Marginal trading; it is generally used in day trading. In this type of trading you have to close deal by give time that is generally within very day of the trading. The biggest advantage of margin trading is that you need not invest the full value of the stocks that you trade in i.e. 5% or 10% of buying value of stocks. Though you can hold more stocks with the fund while doing margin trading. Another advantage of margin trading is that you can short selling of stocks. That Means you can gain by selling the stocks at higher price and then buying the on same day at lower rate. The Brokerage of margin trading is lower than delivery based trading.

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