The share market is a platform where everyone can enter and try his luck in the form of investment and trading in shares of companies listed on exchanges. There are also benefits as well as limits of this market like many others that one must keep in mind before going for the trades. In many cases, people have made the wrong decisions and have to suffer from huge losses also. To avoid such a situation, one needs to have trades only after proper research and understanding only. One needs to know the movement of the market as well as sentiments that can help him take the judgment and decide if one needs to buy, sell or hold the position.
The margin money and limits:
For trades in this market, one needs to pay some amount to the broker or broking firm on the basis of this amount, the firm or broker may open a limit and allow him to have trades. The trades can be in retail or bulk, which depend on the choice and profile of the trader. If one is new to the market, it is recommended to go for the lowest margin for intraday trading as one may not have that much command on the market and hence land to wrong trade which can lead to severe loss. To avoid such loss, one needs to go have a low margin,which may definitely reduce the chances of having huge profit but also saves one from having a huge loss.
The traders who look at the broad perspective and expect huge profit may not prefer to go for the lowest margin for intraday trading, but it is doubtlessly a good way to save the financial profile from a huge potential loss. However, after having proper understanding and command on the market, one can go for higher limits of margin and increase his volume also, but in the initial stage, the low margin can be good for the client as well as a broker.
For every trader who enters the trading world, it is necessary to open a trading account, and while going for the same, the broker or concerned company asks for margin money. It is this money only on the basis of which the limit for the client is opened, and he is allowed to trade. For every company, the rule of margin money is different. The simple rule here is more the amount given by the client as margin money more credit he is offered by the concerned company. Hence those who want to go for bulk trading it is necessary to keep a high amount as margin with the broker.
If the limit is short, one cannot place the order with a large amount, and in that case, one may have to lose an opportunity of earning good profit in this market. There is norule set by the companies or SEBI as far as the margin money and credit given to the client are concerned.