How the SEBI new margin rules impact the day trading, what actually the rule is about?
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SEBI New Margin Rule
Securities and Exchange Board of India, SEBI, which operates the Indian stock market has implemented a new margin rule recently.
Before talking about the new margin rule, let me explain about what actually the margin is.
What is Margin:
Margin is nothing but the percentage or a portion of your capital used for execution of the trade.
SEBI has increased this margin requirement to make trading safer and avoid too much borrowing.
It is like having enough money in your pocket before making a purchase. These rules help control risks and ensure traders have enough funds to execute their trades.
Especially for option traders & intraday traders, this new margin rule will going to effect in a huge manner.
Make sure to understand and follow these rules to trade smoothly in the stock market.
In the past brokers have given 20 times of the capital amount to execute intraday orders. Innocent traders have utilized the full margin and executed bulk orders, when the market went in the wrong direction, they lost the entire capital in a single.
To avoid such scenarios, SEBI has brought this rule for the welfare of the beginner traders.
SEBI New Margin Rules 2023:
SEBI, the Securities and Exchange Board of India, is like a controlling board in the Indian stock market. It brings new rules frequently according to the market conditions. It always ensure safe & transparent activities for everyone investors, traders, brokers, and companies listed.
What is the Purpose of SEBI Margin Rules?
Margin rules set by SEBI are like safety measures to make sure you have enough money in your account when you trade in the stock market. It is like instructing traders to maintain sufficient funds required for trading.
SEBI has introduced various margins. Let’s discuss a few important ones:
SPAN Margin: This margin is like a minimum security deposit you need to have to take up a trade. This margin was calculated based on the risk of the current position you took.
Exposure Margin: This margin allows you to trade a bit more than your available funds. It is like giving you a small boost to make slightly bigger trades.
SEBI sometimes changes these rules according to the market needs. The primary goal of the changing margin rules is to keep the market stable and protect investors.
These margin rules are to ensure you do not end up in a risky situation where you have invested too much without enough funds to cover it. It make sures the trader is financially stable and avoid unnecessary losses.