Margin is the money borrowed from a brokerage firm to purchase an investment. It is the difference between the total value of securities held in an investor's account and the loan amount from the broker. Buying on margin is the act of borrowing money to buy securities.
Story of a trader who has given a new perspective whether to use margin or not is as appended below:
I NEVER use leverage since that's borrowing capital from your broker that is more than what's in your account. The thing about trading with leverage is that you can never really be 100% sure how a stock is going to move so by trading with more money than you have, you open yourself up to tremendous risk and no amount of potential profits is ever worth the risk of disaster for me.
I traded illiquid penny stocks before I became risk averse, but I only lost 35%, I didn't go broke, or worse, in debt to my broker, had I invested all my money and more into those penny stocks. If you're dealing with a small account, one bad margin call due to excessive use of leverage can wipe out your entire portfolio since you'll be responsible both the money you lost and the extra you owe back to your broker.
The bottom line is this: stay away from leveraged trading! You aren't a perfect trader, so don't bet other peoples' money on whether you'll win or lose. Margin is a necessary evil you need in order to bet against stocks, but when I use it, I only use a small portion of my account so even if I'm wrong, I'm not risking disaster or big losses.
Our Take on the Subject
Use the margin as per your risk-taking ability as you benefit in intraday by employing less capital but higher margin and thus to stay protected, you can consider going say 5-10 margin and margin should be avoided on any borrowed capital.
You can make use of the best SEBI registered stock advisory company to ensure that your capital remains protected and your bank balance grows courtesy the profit.
You
should Trade Less But Trade Accurately & this is Achieved with our Tip.
