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Flattrade Margin Trading Facility: A Comprehensive Investors’ Guide for 2024

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Table of Contents

Top Features of Flattrade MTF

Benefits of Flattrade Margin Trading Facility (MTF)

How Does Flattrade Margin Trading Facility Work?

Using Flattrade Margin Trading Facility (MTF): Do’s and Don’ts

Conclusion

The Flattrade Margin Trading Facility (MTF) is a groundbreaking facility that has become quite popular in recent years. It empowers investors to purchase shares and securities with the added advantage of margin, providing a new dimension to their trading strategies. As a broker, Flattrade effectively leverages investors’ funds, enabling them to acquire shares beyond their immediate financial capacity, expanding the realm of trading possibilities. Know about the top features and advantages of Flattrade Margin Trading Facility, for a comprehensive and dynamic trading experience.

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Top Features of Flattrade MTF

Flattrade Margin Trading Facility (MTF) helps elevate your trading due to various features:

1. Lowest Industry Interest Rate – 18%

Flattrade Margin Trading Facility stands out with the industry’s lowest interest rate at 18%, providing cost-effective financial leverage for traders. This advantageous rate empowers investors to maximize their trading potential while minimizing interest expenses.

Read on: Flattrade Algo Trading 2024: A Complete Guide for Traders.

2. Buy Now, Pay Later

Enjoy the flexibility of buying stocks and deferring payment. Flattrade Margin Trading Facility allows investors to make immediate trades and settle payments at a later date, providing a strategic advantage in capital deployment.

3. Book Profits Whenever Required

With Flattrade Margin Trading Facility, investors have the freedom to book profits at their convenience. This flexibility enables timely decision-making, allowing traders to capitalize on market opportunities and optimize their investment returns.

4. Hold Positions for a Longer Period

Investors can hold positions for an extended duration with Flattrade Margin Trading Facility. This feature caters to those who prefer a strategic, long-term investment approach, providing the necessary financial support to maintain positions over an extended horizon.

Benefits of Flattrade Margin Trading Facility (MTF)

In traditional trading, for executing trades, having sufficient funds in your account is imperative. However, Flattrade MTF offers a solution when the available funds fall short. Investors can activate the Margin Trading Facility, allowing them to borrow a specified amount from the broker to purchase desired stocks.

Clients utilizing Flattrade Margin Trading Facility (MTF) can leverage cash or shares as collateral. Opting for cash collateral provides a 4x margin on the amount transferred to the MTF account, with an 18% per annum interest on the utilized margin.

For instance, a transfer of Rs 1 lakh allows buying shares worth Rs 4 lakhs. Alternatively, clients can use shares as collateral, obtaining as much as 4x margin based on eligible shares with a corresponding 18% per annum interest.

In case of a shortfall, clients have 5 business days to rectify it, or positions will get squared off at market prices. Explore the list of approved shares on the website and review MTF terms before Flattrade Margin Trading.

To initiate a trade, investors contribute a percentage of the total share price as margin, while the remaining amount is financed by Flattrade. The margin requirement varies based on the stocks and securities involved.

How Does Flattrade Margin Trading Facility Work?

Here is how the Flattrade Margin Trading Facility (MTF) works:

The process begins with investors pledging their approved securities. These can be shares and securities existing already, and meeting Flattrade’s criteria for collateral. By pledging these assets, investors unlock a gateway to accessing margin for their trades.

Once the securities are pledged, you have to transfer them to a Pledge DP (Depository Participant) account. This specialized account acts as a custodian, managing the pledged securities securely while facilitating the margin trading process.

With the securities safely in the Pledge DP account, investors witness a change in their Flattrade MTF account. The pledged securities act as collateral, and corresponding margin credits are added to the MTF account.

Investors can now strategically place orders for purchasing shares and securities. The Flattrade platform ensures a seamless and efficient process, allowing investors to capitalize on market opportunities and execute their trades with precision.

After the purchase order, investors must focus on repaying the availed margin amount. This step ensures a disciplined approach to leveraging borrowed funds, contributing to long-term financial health.

Upon successful repayment of the availed margin, investors witness their trades culminate. The acquired shares and securities are seamlessly integrated into their trading account, ready to contribute to portfolio growth and potential gains.

Using Flattrade Margin Trading Facility (MTF): Do’s and Don’ts

These guidelines can help you use the Flattrade Margin Trading Facility properly, while safeguarding against potential pitfalls.

Dos:

These are the things to remember:

1. Invest Only in Approved Shares and Securities

One of the cardinal rules is to trade exclusively with approved shares and securities. Ensure that the assets you intend to pledge or purchase align with the Flattrade collateral criteria.

2. Use “MTF” Product Code for Approved Securities

When placing orders for approved securities through the Flattrade platform or mobile applications, employ the product code “MTF.” This ensures that the trade is executed within the parameters of the Margin Trading Facility.

3. Employ “CNC” Product Code for Unapproved Stocks

In the case of purchasing unapproved stocks, exercise caution and use the product code “CNC” when placing orders. This helps differentiate between trades under MTF and regular trades.

4. Initiate Balance Transfer through Formal Request

If you wish to transfer excess balance from your normal trading account to your MTF account, send a formal request via email to accounts@ftconline.in. This ensures transparency and adherence to your financial preferences.

Don’ts:

These are the things to avoid:

1. Assumption of Automatic Balance Transfer

Avoid assuming that excess balances in your regular trading account will automatically transfer to your Flattrade Margin Trading Facility account. The transfer must be explicitly requested through the designated email address.

2. Neglecting Company’s Rights to Adjust Balance

Be aware that the company holds the right to move balances from the normal account to the margin account without notice if there is a shortfall in the margin. Stay vigilant about your account balances and maintain communication with the company as needed.

3. Overlooking Interest Charges

Acknowledge the interest charges associated with Flattrade Margin Trading Facility. If you avail MTF by pledging shares and securities, interest is calculated on a daily basis on the entire funded amount. The interest is typically charged at the end of the month, requiring careful monitoring of your financial obligations.

Read on: Flattrade Charges 2024: Top Charges Explained for You.

4. Failure to Monitor Interest Rates

Regularly monitor the interest rates associated with MTF, especially when leveraging the facility by pledging shares and securities. A vigilant approach helps in managing costs and optimizing the overall impact on your portfolio.

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Conclusion

Flattrade’s Margin Trading Facility represents a game-changing tool for investors looking to take their trading strategies to the next level. By providing the flexibility to use cash or pledged securities as margin, Flattrade empowers investors to navigate the complexities of the financial markets with increased efficiency and potential for higher returns. As with any trading tool, it is essential for you to thoroughly understand the risks and use the facility responsibly, leveraging the power of margin to optimize their investment portfolios.


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