India’s economic momentum is visible in the growth numbers – the country is forecasted to be the world’s fastest-growing major economy with a projected Gross Domestic Product (GDP) of $7.3 trillion by 2030. With this, a new generation of investors are discovering that the stock market is a powerful and accessible avenue to build wealth. This shift is clearly reflected in the surge in Demat accounts, which crossed a record of 19 crore in 2025.
The good news is that one doesn’t need a fortune to participate in this growth story. In fact, traders are now doing bigger trades with less upfront money. This dynamic is being driven by Margin Trading Facility (MTF), a tool that is empowering a new generation of investors to amplify their buying power. The MTF book itself has grown significantly, crossing the ₹90,000 crore mark in 2024.
MTF allows you to buy more stocks than you can get with just your own money. Essentially, your broker lends you the funds to cover a portion of the trade. As the trader, you only need to put up a fraction of the total trade value, known as the initial margin. The rest is covered by a broker’s loan. For example, if you want to buy stocks worth ₹1,00,000 and the margin requirement is 25 per cent, you would only need to give ₹25,000. The remaining ₹75,000 is borrowed from the broker, allowing you to control a much larger position and potentially multiply your gains.
Why MTF is redefining trading today
MTF is no longer a tool being used by a select few. The accessibility has broadened, with modern trading platforms making it easy for any retail investor to use this facility. Some of the best investing apps in India today integrate MTF into their systems, making margin trading as simple as a few clicks. This has provided a new level of flexibility, allowing investors to:
- Amplify their buying power and take advantage of opportunities without having to wait to build a corpus of savings
- Buy a variety of stocks across different sectors and diversify the portfolio, even with limited cash
- Capitalise on short-term movements as you act quickly on market news or trends
Advantages and risks
Even as MTF is a powerful way to multiply your gains, you need to exercise caution as it can bring certain risks too.
Some of the advantages are:
- Leverage: One of the main benefits of MTF is the ability to maximise potential returns. A small positive price movement on a large position can result in substantial profits relative to your initial investment.
- Market exposure: You can take on larger positions, giving you greater exposure to potential market upsides.
- Flexibility: It offers the ability to act on opportunities without liquidating existing holdings.
Some of the risks to be mindful of include:
- Amplified losses: Just as profits are magnified, so are losses. If the stock price falls, a small drop can result in a significant loss on your total position, potentially wiping out your entire initial margin.
- Interest costs: The funds being borrowed from the broker come at an interest. You must pay interest on the borrowed amount, which can eat into your profits.
- Margin calls: If your position loses value, your broker can issue a “margin call”, requiring you to deposit additional funds to meet the maintenance margin. Failure to do so can result in the forced liquidation of your position.
How to get started with margin trading
If you are looking to make a foray into the world of MTF, just follow this simple, step-by-step guide:
Choose a reliable broker/ platform: Select a SEBI-registered broker that offers MTF and has a user-friendly platform.
Open a Demat Account: To begin margin trading, the first step is to open a Demat account with a trusted broker. This is the prerequisite for all forms of stock trading in India. Once your account is active, you can then enable MTF.
Activate MTF with your broker: Most brokers require you to manually activate the MTF option within your account after your Demat account is set up. Next, fund your account with the required initial margin amount.
Start small and manage risk: Begin with small positions to understand the mechanics and risks before committing larger amounts.
Pro tips to use margin wisely
It is imperative to use this facility wisely. Read on for some pro-tips:
- Moderate leverage: Avoid using the maximum leverage available. The higher the leverage, the greater the risk of a margin call.
- Track interest costs: Be mindful of the interest rate charged by your broker. This cost can significantly impact your net returns.
- Liquid and quality stocks: Use margin only for highly liquid, high-quality stocks to minimise the risk of being unable to exit a position.
- Diversify: Never put all your leveraged funds into a single stock. Diversifying your positions can help manage risk.
Conclusion
Margin trading is not just a tool but a strategy that is reshaping how India trades. However, while it is a powerful way to leverage opportunities and grow capital, it comes with risk. When used responsibly, with the right platform and a strategic mindset, margin trading can be a transformative strategy for modern traders.
Note to the Reader: This article has been produced on behalf of the brand by HT Brand Studio and does not have journalistic/editorial involvement of Mint.
