abhishreshthaa
Abhijeet S
IF YOU BUY FROM YOUR CASH, YOU CAN PURCHASE ONLY LIMITED STOCK. HOWEVER, WHEN YOU BUY SECURITIES USING MARGIN TRADING, YOU CAN PRACTICALLY PURCHASE DOUBLE THE AMOUNT OF SECURITIES YOU ORIGINALLY PURCHASE WITH THE SAME AMT. OF YOUR CASH.
EXAMPLE :
YOU PURCHASE RS.20000 WORTH OF SECURITIES USING RS.10000 OF CASH & RS.10000 OF MARGIN.
ADIDAS IS TRADING AT RS.100 & YOU FEEL THAT IT WILL RISE.
IN A PURE CASH TRANSACTION, YOU WOULD ONLY BE ABLE TO BUY 100 SHARES(100 SHARES * RS.100 =RS. 10000).
SINCE YOU ARE INVESTING ON MARGIN, YOU HAVE THE ABILITY TO PURCHASE 200 SHARES(200 SHARES * RS.100 = RS.20000).
EXAMPLE :
YOU PURCHASE RS.20000 WORTH OF SECURITIES USING RS.10000 OF CASH & RS.10000 OF MARGIN.
ADIDAS IS TRADING AT RS.100 & YOU FEEL THAT IT WILL RISE.
IN A PURE CASH TRANSACTION, YOU WOULD ONLY BE ABLE TO BUY 100 SHARES(100 SHARES * RS.100 =RS. 10000).
SINCE YOU ARE INVESTING ON MARGIN, YOU HAVE THE ABILITY TO PURCHASE 200 SHARES(200 SHARES * RS.100 = RS.20000).