Margin Trading Facility – How It Works, Risks & Rewards4 min read
Ever felt like you spotted the perfect stock at the right time… but didn’t have enough money in your account to make the most of it?
Yeah, that can be frustrating. The stock looks strong, you’ve done your research, and you know it’s the right move. But your capital limits how much you can invest.
This is where MTF (Margin Trading Facility) comes in. It’s a way to get upto 4x more buying power—without having to add more money upfront, by getting margin on the existing funds.
But MTF trading isn’t magic. It can help boost returns, but it also comes with risks. So let’s simplify it.
What is Margin Trading Facility (MTF)?
MTF is a service that lets you buy more stocks than you can, using just your own money.
Instead of paying the full amount for a stock, you pay a part of it (called the “margin”), and your broker—like Paytm Money—lends you the rest.
It’s like getting a temporary boost in funds, so you can take a bigger position in the market.
But unlike a loan where you repay in EMIs, this is backed by the stocks you buy. You pay interest daily until you square off your position.
How Does MTF-trading Work?
Here’s how it plays out:
- You find a stock you want to buy—say it costs ₹10,000.
- Paytm Money might ask you to pay just ₹2,500 upfront (that’s 25% margin).
- Paytm Money covers the remaining ₹7,500 for you.
- The full stock is in your account—but remember, you owe the ₹7,500 until you pay it back or sell the stock.
- You’re also charged a small daily interest on the borrowed part.
P.S: Do not forget to pledge your MTF trades to prevent square off from: Account Section > Pay Later ( MTF).
You get to hold the stock, track its price, and sell it when you want (as long as you maintain enough margin).
You can also add funds later to reduce interest or convert to full delivery.
Why Do People Use MTF?
Because when you’ve done your homework and the opportunity looks solid, more buying power means more potential returns.
Let’s say you had ₹5,000. Without MTF, you could buy only 5 shares of a ₹1,000 stock.
With MTF trading, you might be able to buy 15 shares instead, by using your ₹5,000 and borrowing the rest.
If the stock goes up ₹100, your gain would be ₹1,500 instead of ₹500.
That’s why MTF exists—it gives your conviction more room to play out.
But Wait—What’s the Catch?
Just like MTF trading can boost gains, it can also amplify losses.
Here’s what you need to know:
- If the stock price falls, your losses increase because you bought more shares using borrowed money.
- You’ll still need to pay interest daily, no matter what the stock does.
- If your margin drops too low (because of price fall or not adding funds), Paytm Money might sell your stock to recover the borrowed amount—this is called a margin call.
- You don’t lose more than your total amount, but you can lose faster if you’re not careful.
So yes, it’s powerful—but also something to handle with full awareness.
Pros and Cons of Using MTF or MTF Trading
| Pros | Cons |
| You can buy more with less money upfront | You pay daily interest on the borrowed amount |
| You get delivery of the stock in your account | Stock can be sold if you don’t maintain margin |
| No fixed repayment date—flexible exit | Can increase your losses if the stock falls |
How to Use MTF on Paytm Money?
| Book Size | Interest Rate (p.a.) |
| Upto ₹1 Lakh | 9.75% |
| ₹1 Lakh- ₹25 Lakhs | 14.99% |
| Above ₹25 Lakhs | 9.75% |
Using MTF on Paytm Money is pretty smooth:
- Open the app and choose a stock that’s MTF-eligible.
- Tap ‘Buy’ and select ‘Pay Later(MTF)’ on order pad.
- Check how much margin is required—Paytm Money shows this clearly.
- Add the required funds and place the order.
- That’s it—you now hold the stock under MTF.
You’ll also see the interest rate upfront—currently, it starts at just ₹2.6 per day for every ₹10,000 borrowed.
There’s no fixed holding period, but it’s best to track your MTF positions regularly.
How to Be Smart About MTF trading?
- Only use it when you strongly believe in the stock and are okay holding it for a while.
- Don’t max out your limit—leave room for price movement.
- Keep an eye on your margin status.
- Use stop-losses to protect yourself from big drops.
- And most importantly: Don’t borrow just because you can.
Wrap-Up: A Tool, Not a Shortcut
MTF is like a power tool—if you know what you’re doing, it can be really effective. But if you use it without care, it can also backfire.
So don’t look at it as a shortcut to fast profits. Look at it as a way to back your conviction with a little more firepower, when it makes sense.
If you’re ready to explore, Paytm Money has made it simple, transparent, and accessible.
Try MTF Trading on Paytm Money today—use smartly, grow steadily.
