Before step into the discussion of Zerodha Margin Calculator, let’s get acquainted with the concept “Margin” in the trading field. Let’s assume that a trader is engaged in the stock market and doesn’t have enough funds to initiate a trade. Here, in this situation, he can get a loan from his brokerage firm to purchase securities. It’s called buying on margin. For obvious reason, borrowing money isn’t without its costs. The charge is not static, brokerage firms fix the rate according to their demand. The slabs of margins are different as per the security.
What is Margin in Trading?
If we simplify the concept, Margin the difference between investor’s holding amount value and the loan amount from a broker. Margin trading is the act of borrowing money to buy securities, often known as buying on margin. Here, the trader or buyer has to pay a certain percentage of an asset’s value and borrows the rest from the broker. The broker plays a lender’s role here. After squaring off the position, the margin can be settled.
Features of Margin in Trading
In order to clarify the margin trading properly, here we’ve tried to list some of the features:
- The margin payment and repayment duration vary for different stock brokers.
- In case of converting any shares from intraday to delivery, you need to have that amount in your account. Margin used in intraday can’t be added to delivery.
- As I have mentioned above that margin calculation differs according to the security type. Like in Zerodha, in the equity section traders can get maximum 15 times, commodity 70 times and F & O 33 times. (Margin amount can be changed as per the market demand)
Zerodha Margin Calculator
It can be assumed that the concept of margin is clear now. So, in continuation with the previous discussion, we can move into the main topic Zerodha Margin Calculator.
Equity Margin Calculator
Depending on the stocks and order type, equity margin may differ. In Zerodha traders can get intraday leverage in both normal MIS and BO & CO order.
As of the current update, the above table displays margins as per the individual stock. Here, you need to remember a point that MIS and BO-CO orders carry different margin. For an example, I choose a stock Reliance on both MIS and BO-CO and margin outcome is different.
As you can see that in MIS you’ve got 14x leverage whereas in Bo & Co there is 15x margin.
This is the equity futures, here you can see, on the right side of the list, there is a calculate option with each stock. By using the calculate option, traders can analyze the price. The chart displays the contract name, expiry date, lot size, price, the margin in NRML, MIS, and MWPL.
For example, I choose ACC contract of Jan and make the calculation.
As the picture displays that there are a span, exposure margin, total margin. Hence, total margin means the span or initial + exposure.
Total Margin defines the margin required to hold the position overnight, it’s also called NRML margin at Zerodha. If traders use the product type as MIS instead of NRML while placing an order, they can get additional leverage only for intraday trades.