MTF in Dhan stands for Margin Trading Facility, which allows traders to leverage their positions in the equity market. In simpler terms, Dhan funds a portion of your investment, allowing you to trade with more capital than you actually have.
How Margin Trading Facility (MTF) Works on Dhan:
- Leveraged Positions: MTF lets you take larger positions than your available funds would typically allow.
- Broker Funding: Dhan provides the remaining funds needed to execute the trade.
- Leverage Amount: Dhan offers up to 4x leverage on over 1000 stocks. This means you only need to put up a fraction (e.g., 25%) of the total trade value.
- Example: If you want to buy ₹10,000 worth of stock and Dhan offers 4x leverage, you might only need to deposit ₹2,500 (₹10,000 / 4) and Dhan will fund the remaining ₹7,500.
Key Benefits of Using MTF:
- Increased Trading Capacity: Trade with more capital, potentially increasing profit opportunities.
- Access to More Stocks: Invest in stocks that might otherwise be out of reach due to capital limitations.
Important Considerations:
While MTF can amplify gains, it can also magnify losses. It's crucial to understand the risks involved and trade responsibly. Remember that you will be charged interest on the margin amount provided by Dhan.
