Swing Traders Pain for MTF (Margin Trading Facility) E-Margin

General
62

I don’t have high hopes, as I don’t think the interest rates will be cheaper or at par with mstock.

63

Personal opinion. Even if mStock offers MTF at 3% p.a. I wouldn’t go with mStock. Its a complete mess of a platform and levies too many opaque charges.

I wouldn’t trust mStock with a single penny of mine. If you are so concerned about other brokerages competing with mStock, I think you are better off with mStock.

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64

Hope MTF already started for the selected account , How is the Interest rate ?

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65

I am not sure, how is MTF helpful?
If one has a high conviction of their trade, one can easily trade in Futures - eg. buying Futures for say 3 months later. One has ~200 such scrips available.
Leverage is already high in this case with no interest, ofcourse tax will be higher but high leverage with no interest to pay will take care of it.

Someone pls clarify if I am missing anything.

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66

There could be many points, but i am mentioning here some of the most important one:

  1. In MTF you are the owner of the stock which makes you eligible for dividend, bonus, right issue, etc

  2. You don’t need to roll forward your positions every month, sometimes the difference between the future price and spot price is significantly high, which makes MTF position comparatively cheaper due to lower rate of interest.

  3. Margin calls are less frequent, so if you have some positions under MTF that are in profit and some are in loss but the net is profit, you usually dont get margin calls for loss making scrips, which is not the case for future. This is a very signficant point as it directly impacts your liquidity.

  4. Psychologically Futures tend to create more stress and anxiety as you accrue losses on daily basis due to MTM which create panic, whereas MTF gives the comfort of equity delivery and you dont get paniced even the scrip is 10% or 20% down. This is my personal experience, others may think differently.

  5. In MTF you have almost 4-5x more stocks available to take position, so more options available.

  6. You get lower tax rate, LTCG 10% and STCG 15%, so if you are in a 30% tax bracket the difference will be huge. Its frequently said by wealthiest Indians, that if you want to quickly create wealth in India try to increase your income flow from the source that is subject to LTCG

  7. The difference between Fut and Stock price is the interest component, so there is an interest component in FUT, which at times higher than interest you avail in MTF.

MTF is the bridge between the equity delivery and FUT, and it is going to be the new normal very soon. It’s so powerful that I am seeing ppl with good capital are also switching from equity delivery and option trading to MTF.

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67

I don’t believe they have started yet.

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68

Please include me too, whenever you start MTF. I have been trading with Zerodha, and like it. But some of my strategies requie MTF, and would definitely like to try it out.

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