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Adroit Financial Exposure/Margin Review

Adroit Financial Services Pvt. Ltd., a member of the NSE, BSE, MCX, NSDL, CDSL, and NCDEX, offers many financial services, such as equity trading, commodity trading, currency trading, derivatives trading, mutual funds, IPOs, depository services, and portfolio management services (PMS). Adroit Financial also offers margin trading services to its customers. Adroit Financial provides complete trading and investment solutions to its customers. Adroit Financial offers advanced and feature-rich trading platforms to trade stocks and commodities. Adroit Financial mobile app offers a paperless and hassle-free demat and trading account opening process to its customers. Adroit Financial provides customer care support to assist in the account opening process, placing trades, etc. Investors can contact Adroit Financial via mobile number, email, SMS, social media, and many other ways.

What is an Exposure/margin and Margin trading facility (MTF)?

Exposure/margin refers to the amount of funds or securities required to be held in a trading account to cover potential losses from market fluctuations. It acts as a safeguard, ensuring that traders have sufficient resources to honor their trading commitments and manage risks effectively.

Margin Trading Facility

Margin trading facility (MTF) is a specialized service offered by Adroit Financial that allows traders to leverage their capital by borrowing funds or securities to trade larger positions than their available balance. This enables traders to amplify potential gains, but it also comes with higher risk. MTF permits traders to buy or sell securities with a fraction of the total transaction value, provided they maintain the necessary margin. It requires careful risk management and adherence to specific terms and conditions set by the provider.

Adroit Financial Margin/Exposure Limit

Adroit Financial Exposure/Margin limit for different types of securities and trading are mentioned below:

Advantages of Margin Trading

• Leverage: Margin trading allows traders to amplify their buying power, enabling them to control larger positions with a smaller amount of capital. This potential for increased gains can be appealing.

• Enhanced Profits: When successful, margin trading can lead to higher profits due to the ability to trade larger positions. This can be especially advantageous in a trending market.

• Diversification: Margin trading provides an avenue for diversifying a portfolio without the need for significant additional capital, potentially allowing exposure to a broader range of assets.

• Short Selling: Margin accounts often permit short selling, allowing traders to profit from falling prices by selling borrowed assets and repurchasing them at lower prices.

• Hedging: Margin trading can be used for hedging strategies to mitigate potential losses in other parts of a portfolio.

Disadvantages of Margin Trading

• Increased Risk: The use of leverage in margin trading magnifies both gains and losses, making it riskier than trading with only one's own capital. A small price movement can result in substantial losses.

• Interest Costs: Borrowed funds in margin trading typically come with interest charges. These costs can accumulate quickly, especially if trades are held for an extended period.

• Potential Loss of Capital: In cases of severe market downturns, excessive leverage can lead to substantial losses that exceed the trader's initial investment, potentially leading to indebtedness.

• Limited Time: Borrowed funds in a margin account need to be repaid, which can impose a time constraint on profitable trades if the market doesn't move in the trader's favor within a specific timeframe.