What is margin in Nifty F&O trading?

General
1

Hi friends,

I am new in trading and want to trade in Nifty Futures. I used the span calculator for that and get the following result :

  Buy 1 lot Sell 1 lot
Initial margin 31,225 30,983
Exposure margin 18,729 18,772
Total margin 49,954 49,755

I have some general doubts regarding this result.

When I am buying (Not intraday, I want to take position) :

1. Do I need at least the total margin amount 49954 in my trading account ?

2. Suppose I have free cash of Rs. 1,00,000 in my trading account. If I buy 1 lot of Nifty Fut, what would happen to this amount?

When I am selling :

3. I can understand that the broker charges exposure margin for any potential loss while buying. But when I am selling the future contract why again there is a margin amount ?

Could you please resolves these doubts. Thanks in advance.

2

  1. yes

  2. You will have Rs 50,000 pending in your account. You can this to buy more or withdraw funds.

  3. If you are selling what you have already bought there is no margin. Shorting margin is required, if you are selling first and buying back later. I guess you are still new to the concept of shorting. Suggest you to look at : http://zerodha.com/varsity/

1 Like
3

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