What is Delivery Margin?
To understand Dilivery Margin, lets first understand what is Margin and what is Delivery.
What Is Margin?
Margin means the equities (Stocks) that traders or investors have in their account from the broker. Majority of brokers provide margin for Intraday trading 3x to 5x. Buying stocks on margin means you are taking a kind of loan from your broker that you uses to buy a equities (Stocks). example Stock A current price is Rs. 100, broker allow Intraday trading 5x, you have funds Rs 10,000/-, lets see below.
|Stock Current Price||100|
|Available Intraday Margin||5x|
|You have available Funds||Rs. 10,000/-|
Funds X Margin = Received total fund / stock price
Rs. 10,000 X 5 = Rs. 50,000 / 100 (Stock Price) = 500 Quantities
This means with Rs.10,000 you can buy stock worth Rs. 50,000/-
This means with Rs.10,000 you can buy 500 stocks with a 5x margin.
What Is Delivery?
In Delivery, the investor can hold a stock for long period of time but to buy a stock he have to pay full amount according to the stock price, example Stock A current price is Rs. 100 and you want to buy 500 quantities in Delivery, then to buy Stock A you need to pay 500 X 100 = Rs. 50,000/-.
What Is Delivery Margin?
Usually you get margin on Intraday, but now some brokers provide margin for Delivery trading also. But obvious they will charge you something on daily basis or yearly or till you hold the stock.
Some broker provide you 50% to 75% funds on delivery trading. Means for 50% margin on Delivery, according to the total quantity of the stock, you just have to use own 50% fund and broker will provide you rest of the 50% funds. Similarly, for 75% margin on Delivery, according to the total quantity of the stock, you just have to use own 25% fund and broker will provide you rest of the 75% funds.
Example:- Stock A current price is Rs. 100 and you have funds Rs. 1,00,000/-. In normal delivery trading, you will get stock quantity 100000 / 100 = 1000 (quantity).
If you are using a whole Rs. 1,00,000 then with 50% Delivery Margin, you will get 2000 quantity and with 75% Delivery Margin, you will get 2500 quantity.
Check Before Using Delivery Margin.
Before utilizing Delivery Margin facility, you need to have below information before buying a stock. You can check this information with your broker.
- Is the stock that you looking is available for Delivery Margin or not?
- How much Margin is available for Delivery Trading?
- Charges for Delivery Margin?
- How long stock can hold by using a Delivery Margin?
Once you have above details, you can set your caclulation so that you can see whether you will be in profitable at the time of selling stock if it goes as per your prediction.
Keep In Mind.
By using Delivery Margin, the profit increased by double and similarly losses too.
Why OR When Use Margin On Delivery Trading?
Company’s business strategy, plans, roadmap can be changed by certain occasions or suppose there will be a something good news in stock or profitbale quaterlly result, such time the stock price gain momentum, especially in the short term.
If we see as per technical point of view then at breakout in the price chart also offers the opportunity to trade on the positive sentiment around a stock.
In such time, there will be huge potential into the stock and possiblity that stock price can go up that will provide you good return in short time or long time.
When you are sure about such moment into any stock that may not go up today but surely go up in coming days, then you can think about Delivery Margin, but as mentioned about you have to set your caclulation before buying stock so that you can see whether how much day you need to hold stock so that you will be in profitable after removing charges at the time of selling stock if it goes as per your prediction.
Get 50% funds from Upstox.
Upstox provides 50% of funds to you for delivery margin, which means if you have your own funds of Rs.50,000/-, you can buy and hold stock worth Rs.1,00,000/-
Upstox Deliver Margin charges.
- One-time pledging and un-pledging charges of ₹20/stock.
- ₹20/day for every slab of ₹40,000 Margin fund from Upstox.(Above ₹40,000 and below ₹80,000 will be ₹40/day)
Upstox provides Delivery Margin on these 377 applicable stocks and you can hold stocks for a limited period of 365 days only.
Sign Up For Upstox and get 50% funds on Delivery Margin.
Click to Sign Up and follow the procedure to create your demat account with Upstox.
Disclaimer: The above-mentioned brokerage and other charges can be change based on the terms by the brokers. The information posted on this page and in related products are mentioned based on the data available at the time of writing and same are believed through this page. However, in case, there is any discrepancy, please reach out to us so that we can edit or take necessary actions.