Real-world example
You have ₹10k. Broker gives you 5x margin. You buy ₹50k stock. Stock falls 10% (₹5k loss). You lost ₹5k out of your ₹10k (50% loss).
Knowledge base
Margin
Borrowed money from your broker to trade larger positions than your cash allows.
Explain like I’m 5
- Margin is a double-edged sword. It amplifies profits but also amplifies losses.
- If you buy ₹1 Lakh of stock with only ₹20,000 cash, you are using 5x leverage.
- If the stock drops 20%, you lose 100% of your cash.
See it in PortoAI
Understand the risks of leveraged positions.