Margin Trading In NEPSE
1: What is Margin Trading? (Simple Explanation)
Margin trading means buying shares using borrowed money from your broker.
Normally, you can only buy shares with the cash you have. But with margin trading, your broker gives you extra money as a loan, so you can buy more shares than your actual capital.
Example:
If you have Rs 1 lakh, your broker may allow you to buy shares worth Rs 3–4 lakhs.
Your shares themselves act as the security (collateral) for that loan.
2: How It Affects the Market
In Rising Market
When margin trading starts: Traders get more buying power, Demand increases, Market usually moves faster upward. That’s why this news is seen as positive for NEPSE.
3: In Falling Market
But margin trading also has risk:
If the market falls: Traders may face margin calls, Brokers force them to sell shares, This can cause sudden panic selling. So margin trading can make both rallies and falls faster.
In Simple: Margin trading means More power, but more risk.
It can help the market grow faster, but it can also create high volatility if traders misuse leverage. article content here...