Open an Account
Trade Now
  • Markets
  • Products
  • Research
  • Partner with us
  • Blog
  • Refer A Friend
Open an Account
Trade Now
  • Markets
  • Products
  • Research
  • Partner with us
  • Blog
  • Refer A Friend
Home » Blog » Margin Trading » How Leverage Can Boost (or Break) Your Investments: MTF Demystified
Religare Broking by Religare Broking
June 3, 2025
in Margin Trading
0

How Leverage Can Boost (or Break) Your Investments: MTF Demystified

Investments with MTF
  • Last Updated: Jun 03,2025 |
  • Religare Broking

Margin Trading Facility (MTF) offers leverage to the traders in trading allowing them to increase the potential of their investments in financial assets. However, using the MTF excessively or beyond your financial capabilities can result in huge financial losses.

Though, the optimal use of such a facility will help you to achieve your investment goals while enhancing your financial health with a high rate of returns on your investment. Here you need to understand how should utilize this facility smartly so that you can avoid the impact of its consequences and maximize the benefits in terms of getting the best returns on your investments.

What is a Margin Trading Facility?

Margin trading facility is the type of leverage offered by the broker and exchange allowing you to trade much more than the funds you have. Usually, this kind of leveraging facility is offered for intraday or short-term trading. While the broker or exchange charges the interest on such funds or facility of leveraging to traders.

Based on the broker or exchange you can get multiple times leverage to utilize the funds for trading. However, to take advantage of MTF you need to deposit a certain amount as upfront money in your trading account. This amount acts as an initial margin that is used as a collateral security in case of volatile market conditions or when underlying security moves against expectations.

The Benefits of MTF in Trading and Investments

High Purchasing Power: The MTF allows the traders to borrow money multiple times the funds they have. It increases their purchasing power allowing them to enter into large trade positions even with less funds.

Large Trade Position: With the margin facility in trading you can enter into a larger trade position, even though you don’t have enough funds. This kind of leverage allows the traders to trade into high-value assets that would be not possible due to lack of sufficient funds.

Better Profitability: When you get the leverage, your actual amount of investment is very low, but by earning profits on the margin-backed funds, your profitability ratio on your actual fund invested by you makes such profitability very high due to leveraging on such investments.

Flexibility of Trades: Using this margin facility you trade in both types of market situations bullish and bearish. You can use the MTF for long positions as well as for short positions to take advantage of either side short-term movement in the price of the underlying security.

Suitable for Short-term Trading: This can be more useful only in intraday and short-term trading as allowing the traders to take advantage of market swings and volatility in the price of the underlying security. It is a highly liquid investment that helps traders to use their funds in other trading opportunities.

How to Leverage Your Investments with MTF?

Utilizing the MTF to leverage your investment and maximize the actual rate of returns trading in such short-term instruments can help you improve your overall returns on such investments. You need to understand its various aspects so that you can make better use of the MTF allowed by the brokers and exchanges.

Choose the Right Instrument

One of the most important things while using the MTF is to pick the right investable instruments that can give you the highest leveraging power at minimum cost with the lowest risks. Yes, you can use multiple underlying securities to trade with MTF like stock futures or options, index futures or options, currency or commodities futures. Pick the right one as per your trading scope and risk profile.

Avoid Excessive use of MTF

Some traders start using the MTF excessively; it will not only increase their cost of borrowing but also increase the chances of losses due to trades in unfavourable market conditions. And use the margin up to that time that much you can afford to pay when the market does not move as per your expectations. For excessively using the MTF, you will be frequently asked for maintaining the margin call by your broker.

Evaluate the Cost of Borrowing

Before you use this facility, you need to evaluate the interest or fees charged by your broker on such MTF. However, some of the brokers charge only annual fees for providing this facility and few of them charge a rate of interest on the amount you use as a margin in your trading. So, check the interest rates and other charges to optimize your cost of borrowing that can affect your rate of return on such investments.

Timely Liquidate Trade Positions

When you trade using such a margin facility don’t carry your trade positions for longer days, it will not only increase your cost of borrowing but also increase the chances of incurring the losses if market moves against your expectations. Hence, timely exit or profit booking is very important to liquidate your trade positions and release the funds used as a margin.

Avoid Overtrading in the Market

Some traders are obsessed and unnecessarily trade in the market with multiple trades even if the market condition is not favourable. Overtrading and with funds used from the margin facility will not only increase your cost of the transaction but also affect the level of margin you can be allowed for trading. Hence, keep a balanced trading approach to the MTF for limited trading practices.

Trade with the Right Service Provider

Different brokers and exchanges provide different margin ratios, which means how much margin you can get on the funds available to you. Some of the brokers offer only 2 times margin while few of them provide up to 4 to 5 times MTF to their regular customers. However, the limit of margin can differ on types of trading and underlying security. For intraday you can get a higher margin, similarly in high-risk security or underlying security with high implied volatility get the low MTF due to risk of unexpected price change.

Read About the Margin Penalties

When you use the MTF, every day during or the end of the trading session, your broker will ask you for a margin call to maintain the margin ratio as per the change in the value of your trade position due to a change in the price of the underlying security. However, if you do not maintain the margin, your trade position will be squared off or a margin penalty will be imposed by the exchange on your trading account. Hence, make sure to trade wisely to avoid such penalties and make the best use of leverage in trading.

Summing-up

MTF in trading or short-term investing offers a leveraging to multiply your fund’s earnings into many folds by investing a few portions of it. You just need to arrange sufficient funds to maintain the margin calls and you can enter into large trades that would be not affordable for you if such margin facility were not available. It increases your profitably and rate of earnings on such investments.

However, trading with the right risk management is very important to ensure the returns and avoid the impact of major risks due to unfavourable market conditions. Hence, proper research and the use of the right tools and techniques are very important to make your trade successful.

Tags: Margin Trading Facility
Religare Broking

Religare Broking

Related Posts

Is Margin Trading Right for You: A Risk Appetite Assessment Guide
Margin Trading

Is Margin Trading Right for You: A Risk Appetite Assessment Guide

Jun 03,2025

Margin Trading

What are the different types of Margin Calculators and their role in risk management

Aug 05,2024

Margin Trading

Difference Between Margin Trading and Cash Trading. Is Margin Trading Facility Worth the Risk?

Jul 19,2024

Disclaimer:This blog is written exclusively for educational purpose. Any stock mentions in the blog are examples and not recommendations. Please refer to our research reports or analyst recommendations for stock ideas.

No Result
View All Result

Open a Free Demat & Trading Account

Please enter valid name
Please enter valid phone

Category

  • Algo Trading (4)
  • Income Tax (1)
  • Commodity Trading (16)
  • Saving Schemes (12)
  • Derivatives Trading (81)
  • Currency Trading (4)
  • TradingView (2)
  • Margin Trading (4)
  • National Pension Scheme (2)
  • Stock Market (167)
  • Online Share Trading (103)
  • Demat Account (38)
  • Mutual Funds (49)
  • IPO (26)
  • Indian Market & Economy (8)
  • Income Tax (15)
  • Uncategorized (2)

Latest Blogs

Is Margin Trading Right for You: A Risk Appetite Assessment Guide
How Leverage Can Boost (or Break) Your Investments: MTF Demystified
Algo Trading vs Human Traders: Who wins in volatile markets?
Why Invest in Gold through Gold ETFs?
How to Use Algo Trading for Smarter and Faster Trades
Mutual Funds vs. Equity
Understanding call writing and how it works?
Mutual Funds Vs Fixed Deposits: Which investment is best for you?
Debt Mutual Funds vs Equity Mutual Funds: Which is better in 2025?
ELSS vs PPF: Which Tax Saving Investment is Right for You?
Learn More About Margin Trading


Markets

  • Stock Market Live
  • Derivatives
  • Commodities
  • Currency
  • Upcoming IPO
  • Listed IPO

Products

  • Overview
  • Equity
  • Derivatives
  • Commodities
  • Currency
  • Margin Trading Facility
  • IPO
  • IPO GMP

Services

  • Tin FC
  • NPS
  • DSC
  • Open Demat Account
  • Open Trading Account

Research

  • Investment Ideas
  • Trading Calls
  • Research Reports
  • Blog
  • Knowledge Centre
  • Stock Market Holidays
  • NSE Holidays
  • BSE Holidays

Support

  • Contact Us
  • Locate Us
  • Downloads
  • Margin Calculator
  • Margin Matrix
  • Feedback
  • Activation Key
  • Demat Account FAQs
  • Trading Account FAQs
  • About Us
  • Notification
  • Disclaimer
  • Privacy Policy
  • Terms Conditions
  • Rules Regulations
  • Corporate Information
  • Educational Note For Clients On PMLA
  • Partner with Us
Important Links
  • NSE
  • BSE
  • SEBI
  • MCX
  • NCDEX
  • MSEI
  • NSEL
  • IRRA
Investor Complaints
  • NSE
  • BSE
  • MCX
  • SEBI
  • SEBI SCORES
  • NCDEX
  • MSEI
  • SMARTODR
E-Voting Facility
  • NSDL
  • CDSL
Upcoming IPO
  • OYO IPO
  • Yatra Online IPO
  • Ixigo IPO

Unified Portal Version No.1.0.0.2

Copyright 2010 Religare. Trademarks are the property of their respective owners. All rights reserved. Religare Broking Limited (CIN: U65999DL2016PLC314319), Registered Office: 802-815B, 8th Floor, Gopal Das Bhawan, 28-Barakhamba Road, Connaught Place, New Delhi -110001
Telephone No.: +91-011-49871213 | Fax: +91-011-49871189
E-mail: wecare@religareonline.com

Member Religare Broking Limited (RBL) : SEBI Regn. No. INZ000174330 NSE CM, F&O, CD TM Code: 06537 Clearing Member (F&O) No. M50235; BSE CM, F&O, CD, CO Code: 3004 Clearing No: 3004; MSEI CM, F&O, CD, TM Code: 1051 | MCX Membership No. 56560 | NCDEX Membership No. 01276 | AMFI-registered Mutual Fund Distributor ARN No.139809.

Member Religare Commodities Limited (RCL) : Regn No. MCX 10575 | NCDEX 00109|NeML 10042|NSEL 10180 |SEBI Registration No. MCX/NCDEX :INZ000022334.

Depository Participant : Religare Broking Limited (RBL) - NSDL: DP ID: IN 301774 | SEBI Regn. No: IN-DP-385-2018 | CDSL DP ID: 30200 | SEBI Regn. No: IN-DP-385-2018

Religare Broking Limited(RBL) : Research Analyst SEBI Regi. No : INH100006977

Religare Broking Limited(RBL) : Registrars to an issue and share Transfer Agents (RTA) - SEBI Regi. No : INR000004361

Religare Broking Limited(RBL) : Corporate Agent (Composite) - IRDA Regi. No : CA0581

Religare Broking Limited(RBL) : National Pension System - Point of Presence (NPS-POP) - PFRDA Regi. No : POP01092018

Advisory for Investors

  • Investor Charter Stock Broker
  • Investor Charter Research Analyst
  • Investor Charter of Depository Participant
  • Advisory KYC Compliance
  • Investor Charter of Registrars to an issue and share Transfer Agents (RTA)
  • For Reporting of Cyber attack/incident Click here..!!
  • Details of Client Bank Accounts of Religare Broking Limited
  • How to Link Your Aadhaar Number with Demat Account
  • How to link Aadhaar Card with your PAN Card
  • How to Open a Demat & Trading Account Online
  • Member Details
  • SOP - Centralized mechanism for reporting the demise of an investor through KRAs
  • SEBI Investor Website
  • Quiz-NFL-Banner

ATTENTION INVESTOR

-- Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.

-- Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.

-- 20% upfront margin of the transaction value to trade in cash market segment.

-- Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard.

-- Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month.

-- Prevent unauthorized transactions in your account - Update your mobile numbers/email IDs with your stock brokers. Receive information of your transactions directly from Exchange on your mobile/email at the end of the day - Issued in the interest of Investors.

-- Prevent Unauthorized Transactions in your demat account Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from Depository (NSDL/CDSL) on the same day issued in the interest of investors.

--If you have any grievance you may reach Religare Broking Limited at igreligare@religare.com & Religare Commodities Limited at ig.commodities@religare.com.
If the complaint does not get redressed within 30 days, the complainant may use SCORES to submit the grievance.

--Filing complaint on SEBI SCORES – Easy & quick
a. Register on SCORES portal.
b. Mandatory details for filing complaints on SCORES - Name, PAN, Address, Mobile Number, E-mail ID.
c. Benefits - Effective Communication & speedy redressal of the grievances

-- No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investors account.

-- KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.

-- Trading and Demat Accounts opened under Insta Plan will not be eligible for dealing through branches.

-- Please note that by submitting your mobile and email on our website, you are authorizing us to Call/SMS/Whtsapp/RCS/Email you even though you may be registered under DNC. We shall Call/SMS you for a period of 12 months.

No Result
View All Result
  • Products
  • Research
  • Career
  • Partner with us

© 2021 RELIGARE -Designed By Religare.

Open Demat Account
Please enter valid name
Please enter valid phone

Open a FREE Demat
& Trading Account

Invest in Stocks, IPOs, F&O &
Mutual Funds

Please enter valid name
Please enter valid phone
religare logo

Get better recommendations, Make better investments.

Daily Stock Suggestions from Leading Experts!

By signing up, you agree to receive updates on SMS, Email & WhatsApp