Hello, I am new to trading
my question is that broker give margin on stock so what is this? and how to use this
this what I understand plz correct if I wrong
for example, I have margin/ free cash of Rs 1000 in my account and I want to buy the stock of ABC co. which price is 500 per share
and broker provide the margin of 5x on it.
So I can buy up to 5000 (1000x5) is it correct?
then how much I need to pay to broker in case of profit and loss?
Keep it simple. Ur initial 1000 rupees is just a token blocked amount. Broker will give that to u any case. Now if u end in profit u will get additional amount equivalent to profit.
If loss say 4000 broker will debit 3000 ( he will adjust against ur token amount of 1000)