Hi,
Lets say i have 1000 of capital and i would like to buy a share worth 1000 also. If my broker gives me 10times margin on that share, that would mean i can now buy 10 shares instead of 1 share.
My question is , what is the max loss that can happen at the worst scenario? Is it Rs 1000 or even more? Can my capital go negative?
Please help.
@Sangam_Naik In your example,since you have bought 10 shares using the margin facility,the share price would be have to be down by 100 rs or more for all your capital to be in loss and the loss can go beyond your existing capital also in which case you would get a margin call from RMS to increase your margin capital.
doesn’t zerodha has some sort of RMS system where the broker exits my order when the loss is about to cover my entire capital ? @sudheer_kumar
Yes you are right @Sangam_Naik. RMS team does square off if you dont pump in the shortfall money.This support article mentions about the same with regards to FNO,but i think same applies for MIS in intra day too. @siva from Zerodha can actually confirm this.
We do try to cover but if the fall is sudden and intense one may end up losing more capital than available, said that user should ideally take care of the their position.