Portfolio Diversification: With margin trading, you can diversify their portfolios more extensively with the excess available of funds, potentially mitigating risk.

BTST ( Buy Today, Sell Tomorrow ): You can leverage volatily in the market, by short-term buying and selling of stocks using MTF.

Let's understand MTF from below examples Let's assume you have ₹10,000 in your funds, and you want to buy a stock worth ₹1000, so normally, you would be able to buy 10 quantity of the stock ( 10 x ₹1000 = ₹10,000 ).

With MTF, ( assuming margin requirement of the scrip is 25% upfront ), you will only be required to pay ₹250 per scrip. Hence, you would be able to buy 40 quanity of the stock ( 40 x ₹250 = ₹10,000 )

So in this case, you were able to buy 30 extra quantities of the same stock, with the same amount. ( The additional, amount of ₹30,000 , was funded by us, the broker )

Now, let's consider two scenarios:

Scenario 1: The value of the shares increases If the value of the shares increases over time, let's say to ₹1500, you decide to sell them. After selling, you repay the borrowed amount to your broker, along with any interest accrued. Here's how the calculation would look:

You sell the shares for ₹1100 Sell value would be ₹1100 x 40 = ₹44,000 Your initial investment was ₹10,000, and the borrowed amount was ₹30,000 Hence profit would be ₹44,000 - (₹10,000 + ₹30,000) = ₹4,000 That is a whopping 40% profit.

Without MTF, you would have only 10 shares, meaning, only 10 % profit.

Hence, you can see, your profit became 4x due to MTF!

Keep in mind, that the borrowing rate for MTF is a mere 12% per annum. That means, adjusting the profit for interest paid, assuming you held the stock of 30 days, ( at 0.033% per day for ₹30,000 borrowed amount) would be roughly ₹30.

This can be used to find the adjusted profit %, that would still be almost 4x if MTF was not used!

Scenario 2: The value of the shares decreases If the value of the shares decreases instead, let's say to ₹900, and you decide to sell them, here's how the calculation would look: You sell the shares for ₹900 Sell value would be ₹900 x 40 = ₹36,000 Your initial investment was ₹10,000, and the borrowed amount was ₹30,000 Hence loss would be ₹36,000 - (₹10,000 + ₹30,000) = - ₹4,000 That would be a loss!

So be carefully while deciding your investment stocks and timelines accordingly!

In both scenarios, you can see how margin trading allows you to leverage your existing funds to potentially increase your returns or losses, depending on the performance of the securities you invest in.