WHAT ARE MTF STOCKS? A QUICK GUIDE

What Are MTF Stocks? A Quick Guide

What Are MTF Stocks? A Quick Guide

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mtf stocks, or Margin Trading Facility stocks, are equities that can be bought using borrowed funds provided by a broker. This facility allows traders and investors to leverage their capital to buy more shares than they could with just their own money.



How MTF Works


Under Margin Trading Facility (MTF), investors pay a part of the total trade value (known as margin), and the broker funds the rest. The investor is then required to maintain a minimum margin and square off the position within a stipulated time.



Example:


If a stock costs ₹1,000 and the broker offers 4x leverage, you only need to pay ₹250 upfront. The broker will lend the remaining ₹750.






Benefits of MTF Stocks




  • Increased Buying Power: Invest in larger quantities with limited capital.




  • Short-term Gains: Ideal for traders looking to capitalize on price movements.




  • Flexibility: Maintain positions for a longer time than typical intraday trades.







Risks to Consider




  • Interest Charges: Borrowed funds come with daily interest charges.




  • Margin Calls: If stock prices fall, you may need to add more funds.




  • Forced Liquidation: Brokers may square off your positions if margin isn’t maintained.







Commonly Used MTF Stocks


Brokers typically provide MTF facilities for liquid, large-cap, and fundamentally strong stocks, such as:


































Stock Name Sector
Reliance Energy
HDFC Bank Banking
Infosys IT
TCS IT
ICICI Bank Banking







Conclusion


MTF stocks offer a great opportunity for savvy investors to amplify their gains, but they come with increased risk due to leverage. If used responsibly, they can be a powerful tool in a trader’s arsenal. Always assess your risk appetite, and monitor your margin requirements regularly.

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