5paisa Margin Trading

Now that the stock market is in full bloom, many trading platforms and brokers offer their services. But have you ever wondered what 5paisa margin trading is? 

Before beginning the discussion about margin trading, it is essential to get a brief idea about the stockbroker 5paisa. 5paisa is a leading discount broker in the country.

Therefore, it is one of the least expensive and a very affordable option in the stock market. 

5paisa has a lot to offer. Its services are spread in various areas, including currency, stocks, futures, and options. The company also provides algo trading and Robo-advisory.

Apart from this, 5paisa also has mutual funds, insurance, and even loans. 

It also offers the minimum brokerage charges in the market without keeping the order’s size in consideration.

• What is margin trading? 
• How much margin does 5paisa charge? 
• Does the price differ for different services? 

If you are looking for the answers to these questions, you will find all the answers in this article. 

Before diving into any details, let us first understand what margin trading is? 

In Margin trading, an investor opts for shares more than he/she can afford. In margin trading, the stocks are bought and sold in the same session.

In India, you can refer to margin trading as intraday trading as well. A large number of brokers offer the service of margin trading now. 

The process of margin trading is also straightforward, as all you have to do is open a margin account and then pay the initial margin. 

Also Review 5paisa Bracket Order in detail.

Now that we know about the margin trading, let us see what 5paisa has to offer. 

What is Margin in 5paisa? 

5paisa is a discount broker and offers the service of margin trading. However, various terms and conditions come along with margin trading in 5paisa. 

As specified in the SEBI circular, if an equity share is classified as ‘Group 1 security’, it will be eligible for margin trading.

It is totally up to 5paisa whether they want to provide the client with the opportunity of margin trading or not. They exercise full control over this decision. 

5paisa also wants the client to maintain a decided margin for as long as he/she is involved in the margin trading. 5paisa demands the initial margin to be paid in cash only. 

In case of no activity or transaction for 90 days in the margin trading account, the account will be settled immediately. The collateral that the client gives is also liquidated in such cases.  

5paisa also has the right to liquidate the funds if any client provides misinformation or dishonors the arrangement. It is also applicable if anything uncertain happens to the client.

Even if the client gets into a lawfully criminal act, the funds are turned into cash. 

In some cases, the client wants to close down or terminate the margin trading account. In such situations, he/she can pay the dues prior but only after giving it in writing. 

5paisa also makes it certain in the contract that in cases where it is no longer associated with any stock exchange (NSE, BSE), the client’s account will be terminated. 

Some restrictions, such as the funds of one client or an individual, cannot be used to provide mutual trading facilities to some other client. 

There are different margins for different financial instruments in the 5paisa margin trading. For example, 5paisa margin trading for delivery is upto 4x, and 5paisa margin trading for intraday is up to 20x.

 

The margin provided for various services is listed below: 

 

But with the SEBI new margin rule this margin is reduced to 5x. 

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SEBI New Margin Rules

As per this new rule of margin for intraday trading, brokers will provide the margin of 5x to traders from 01 September 2021 onwards.

Not only the traders, but this margin rule is also going to impact the brokers as well.

On one hand, where 5paisa was able to grab the traders’ attention by offering them good leverage for a day trade, these traders would not find it fascinating.

Traders on the other side, would not be able to make a good profit as they now have to trade with the limited funds. This no doubt would affect the number of traders who remain active in the day trading leaving its impact for other trading segments as well.

 

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5paisa Margin Trading Charges 

After the client, with his/her consent, opens the margin trading account, he/she should be aware of the charges levied by the 5paisa. 

The margin charges consist of two charges: 

• Span Margin
• Exposure Margin 

Span margin is the minimum amount that the trader is expected to maintain in the margin account. The stock exchange decides it according to the financial instrument you trade. 

The exposure margin is the amount that is charged in addition to the span margin. This is the amount that is levied to cover the broker risk in the margin trading.

The assessment of the span margin is done based on the underlying risks of the margin trading. Span margin also considers the minimum amount that is required to reach the minimum trading value. 

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How to Use Margin in 5paisa? 

5paisa offers margin trading on specific terms and conditions, but have you ever wondered how to use margin in 5paisa? 

The 5paisa charges a margin of two types, namely the span margin and the exposure margin. The stock exchange mandates a minimum margin; this is called the span margin. 

There are various ways in which you can access the span margin. Some of the parameters are as follows:

• Based on the underlying risks. 
• Based on the past volatility of the risk. 
• If it wants to arrive at the minimum margin value, it needs the worst margin value. 

If you wish to calculate the span margin, then to ease the process for you, there is a 5paisa margin calculator. But the question is, how to use it? The margin calculator or finding the span margin is elementary and convenient. 

You can calculate the margin by following the given steps. 

1. Firstly you have to select the exchange with which you want to trade.
2. Now you need to select the product/segment. For example – Futures or options. 
3. It is now time to select the ticker symbol for the selected scrip. 
4. The next step is the selection of the type of trade. 
5. Now, choose the day your trade will expire. 
6. Selection of the strike price (This step is only valid in the cases of options)
7. Enter the lot size of your chosen trade. 
8. Finally, calculate your span margin. 

These are the steps you can follow to calculate your span margin and make the process easier. 

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Conclusion 

It is evident from the above discussion that there is an option of margin trading in 5paisa. 5paisa has carved an impression as the best and most affordable discount broker in the country. 

Margin trading is when the investor buys more stocks than that he/she is financially capable of. 5paisa renders this service to its clients. Some various terms and conditions are subject to the availability of the margin trading. 

During the whole course of margin trading, the client must keep a minimum margin in the account. The client also must provide the correct information, consent, and value, failing to which 5paisa has the full right to liquidate the funds. 

The client also has the option to pay the price before the expiration date and terminate the account. In cases of sudden demise or any uncertainty happening with the client, 5paisa has the authority to terminate the account. 

The 5paisa has two margin charges; span charges and exposure charges. The span charges are by the stock exchanges. The 5paisa provides a calculator to calculate the margin.

All you have to do is fill in the necessary information and then calculate the margin. The margin trading charges in 5paisa are different for different segments.

For example, for equity delivery, it is up to 4x, and for equity intraday, it is up to 20x. 

Margin trading is a great way to earn profits and enhance your wealth. Although, it is always advisable to study the risks and then proceed. 5paisa is a great platform, to begin with, margin trading.

Now that you know a little about the charges and other essential things, why don’t you consider it? 

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