Queries about Intraday MIS Margin

Hello Frinds,

I am New for stock trading and i am a intraday trader… I Need to know Answers For Following Quires:

  1. What is MIS Margin? Why it is Provided with High Leverage?

  2. If i use MIS Margin in intraday trading with Maximum Leverage. Should i have to repay broker for borrowing of Leverage.

  3. How does Broker Earns thought this MIS Margin?

  4. How this Margin is allocated for a Client ? Does it have any conditions?

  5. Will i have to pay broker for using this MIS Margin for intraday trading. ?

Most brokers give you additional leverage if you were to denote that particular trade as an intraday one. So if you have 1lk in your account, based on which stock you are trading, you can buy/sell upto say 20lks worth of stocks.

Every broker follows a different terminology, MIS is something used by brokers who use Thomson Reuters backend.

  1. MIS or Margin intraday square off. Once you place an order with this type, the broker knows that you intend to trade only for intraday, and hence gives leverage. It is given as a value add, and intraday traders typically look forward to leverage to earn more.

  2. This leverage is typically given only for intraday, and there is no cost of borrowing of this leverage. This is like I said a value add.

  3. A discount broker who charges a flat fee per trade doesn’t earn by this additional leverage. A traditional broker who charges a % brokerage, will now earn a % on 20lks instead of 1lk (in example above). So his earnings go up 20 times if you take 20 times leverage.

  4. Typically this leverage is preset for stocks. The more volatile the stock, the lesser the leverage. At Zerodha it ranges from 3 times to 20 times.

  5. No, as I said earlier, you don’t have to pay anything extra for using this additional money.

Hearty Thanks for Clearing all my Quires Mr.Nithin. I love Zerodha For giving such a support for traders.