2 What is Wealth Discovery’s Margin/Leverage Policy?
Margin/Leverage Policy
At Wealth Discovery our margin policy is designed to cater to the various product
offerings we have this margin policy is subject to change at any point of time based
on market volatility. We offer several membership plans which provide extremely
high (~25 time) leverage for traders fond of margin trading, for more details on
membership plan on offer please refer to our pricing plan section. The following
section will give you our standard margin policies while trading equity intraday
& delivery, F&O, currency and commodity we offer higher leverages than our standard
margins for our clients who have taken different memberships,
Margin Policy for Stocks or Equity Trading
Intraday equity:
When you take a trade in equity and square the position off before the end of day,
it is called as intraday equity trading. Since the trades are squared-off intraday
and does not require any overnight carry of the trade we are able to provide you
a margin or leverage of between 3 to 10 times on around 150 liquid stocks based
on the trading plan you have subscribed to. You can trade intraday at Wealth Discovery
with leverage by using these 2 product types.
MIS (Margin Intraday Square off)
Trades under this product type come with a commitment of keeping the trade intraday
and hence higher leverage between 3 to 10 times based on the risk, volatility of
the stock and the trading plan you would have subscribed to. When you take a trade
using product type as MIS the trades are auto squared off at 3.20pm if you forget
to square-off your trade.
CO (Cover Orders)
Cover orders is another order type which Wealth Discovery has made available for
our active traders. Traders can trade intraday using market orders but with a definite
and compulsory stop loss. Since the risk with such a position is low, the margin
required is less and hence the leverage higher. When you trade intraday using cover
orders, the leverage you get vary from 6 to 20 times (twice as much as MIS). But
again all open positions get squared off at 3.20pm.
Delivery Equity:
When you buy stock and hold it overnight, it is called a delivery trade. At Wealth
Discovery, you need to use product type as CNC while placing a trade to take delivery
of equity stock. The product type CNC will show up on your order window only if
you have a demat account mapped to your trading account since you would require
a demat to take delivery of the equity that you purchase. At Wealth Discovery the
leverage factor for delivery trades is one which means you can only use the amount
that you have to purchase stocks for delivery purposes for e.g. if you want to buy
Rs 2 lac of stock as CNC, you will need this Rs 2 lac in your trading account and
similarly if you want to sell Rs 2 lac of shares with product type as CNC, you will
need these shares in your demat account mapped to your trading account.
Margin Policy for Futures Trading – Equity (Stock & Index), Currency & Commodity
Futures as such are inherently leveraged which means that to buy X amount of futures
you need only a small portion of it called as margin in your account. The margin
requirement to purchase futures is stipulated by various exchanges. There are three
types of products that you can use for trading futures at Wealth Discovery
NRML (Normal)
To take position as NRML you will need the complete exchange stipulated margin,
but once you take a position as NRML you can hold the position till expiry.
MIS is used by intraday traders as all open positions get squared off before the
end of day. But since no position is carried forward overnight the margin required
is also lesser than the exchange stipulated margins.
- For equity & Index futures, MIS margin: 40% of NRML margin, all MIS positions
squared off at 3.20pm.
- For Commodity futures, MIS margin: 40% of NRML margin, all MIS positions
squared off 25 minutes before market closing
- For Currency futures, MIS margin: 50% of NRML margin, all MIS positions
squared of at 4.30pm.
CO (Cover orders)
Cover orders is a unique product from Wealth Discovery where you can trade intraday
using market orders but with a definite and compulsory stop loss. Since there is
a stop loss placed, the risk of the position reduces and hence the margin required
to take it reduces as well.
Margin Policy for Options Trading – Equity (Stock & Index) & Currency
Option buying:
When you buy options, either equity or currency there is no additional leverage
we provide. So if you are buying calls or puts of any contract, the premium required
to buy them has to be present in your trading account.
Option Writing/Shorting:
When you short an option, the margin required depends on various aspects like underlying,
expiry, volatility and more. You can short option either using the product type
as NRML or MIS.