Margin
Borrowed funds or collateral used to take a position larger than the cash available.
Formula
Margin Requirement = Position Value x Required Percentage; Leverage = Position Value / Margin Posted
Unit
₹
In depth
The word carries two unrelated meanings in finance and the confusion is common: here it means borrowed capital or a collateral deposit, while in accounting it means profit as a percentage of revenue — gross margin, operating margin. In trading it is the deposit against a leveraged position, and losses beyond it remain owed. Margin magnifies both outcomes symmetrically, but the consequences are asymmetric: a large loss can force liquidation at the worst price, ending the position before any recovery. Interest is charged on borrowed margin, so a leveraged position must outperform by that cost merely to break even.
Worked example
₹1,00,000 of margin supporting a ₹5,00,000 position is five times leverage. A 4% adverse move costs ₹20,000, or 20% of the capital, and a 20% move eliminates it entirely while leaving further losses payable.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Margin” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.