How to use MTF on Groww? | Margin Trading Facility for beginners

Introduction

This tutorial will guide you through using the Margin Trading Facility (MTF) on the Groww app. Whether you're a beginner or looking to enhance your trading strategy, this step-by-step guide will explain what MTF is, its benefits, and how to effectively utilize it in your trading activities.

Step 1: Understand MTF

• Definition: Margin Trading Facility allows you to trade stocks using borrowed funds, increasing your purchasing power.
• Leverage: MTF enables you to trade with leverage, which means you can control a larger position with a smaller amount of your own money.

Step 2: Know the Holding Period

• Holding Duration: Stocks can typically be held for up to 90 days under MTF.
• Importance: This holding period gives you flexibility to manage trades and capitalize on market movements.

Step 3: Explore the Benefits of MTF

• Increased Buying Power: MTF allows you to buy more shares than you could with just your funds.
• Potential for Higher Returns: With higher investments, there is an opportunity for greater returns.
• Short Selling: You can short sell stocks, which is betting against a stock's price increase.

Step 4: Check Leverage Limits

• Maximum Leverage: The typical leverage available is up to 4x.
• Considerations: Understand that while higher leverage increases potential profits, it also significantly raises the risk.

Step 5: Locate MTF on the Groww App

• Accessing MTF:
  • Open the Groww app.
  • Navigate to the trading section.
  • Look for the MTF option which is usually found under the stock trading menu.

Step 6: Understand the Trading Process

• Differences from Regular Trading:
  • MTF involves borrowing funds, while regular trading uses only your own capital.
  • Ensure you’re aware of the interest on borrowed funds and how it affects your returns.

Step 7: Check Stock Eligibility

• Stock List: Not all stocks listed on the Groww platform are eligible for MTF.
• Verification: Always verify if the stock you wish to trade using MTF is supported in the app.

Conclusion

Using the Margin Trading Facility on Groww can enhance your trading strategy by allowing greater investment power and flexibility. Remember to weigh the risks associated with leverage and ensure you understand the terms of borrowing. With this guide, you can confidently start using MTF and explore its potential benefits in your trading journey. For further insights, consider following Groww’s additional resources and playlists on stock market investing.