Cash Buy transactions are those, where you will pay full value (virtual money) of the transactions and with an intention of keeping the stocks in your custody. Stocks purchased under Cash Buy will reflect in your ‘Demat Allocation’.
Cash Sell transactions are those, where you will sell those stocks that are already in your custody (in some cases are in transit & yet to be delivered) and post successful execution of the order, you will receive the full trade proceeds. These proceeds get added to your limit.
Margin Trades are those trades which are executed when you are not having any intention of taking delivery (in case of Margin Buy) or giving delivery (in case of sell) for the stocks transacted in. your intension is to benefit from the anticipated price movement of the stock.
Margin trades are essentially intra-day trades and these orders are to be squared off before closure of trading hours.
You can have a leverage of 4-5 times of the limit available to you while placing orders under Margin products (applicable to Buy & Sell).
Typically, you should do a margin buy incase are bullish on a particular stock and anticipate the price of this stock to rise during the trading day.
Suppose share price of ‘XYZ Ltd’ is Rs. 100/- and you anticipate that the price of this stock will rise to 110 during the day, You can place a margin buy order at Rs. 100 and in the event of the price rising to your target price you could place a margin sell order and benefit from the difference between sell price & buy price. You should note that you can incur losses in case your view on the particular stock goes wrong.
Typically, you should place a margin sell order if you are bearish on a particular stock and anticipate the price of this stock to fall during the trading day.
Suppose share price of ‘ABC Ltd’ is Rs. 100/- & you anticipate that the price of this stock will fall down to Rs. 90 during the day. You can place a margin sell order at Rs.100/- and in the event the price falling to your target price you could place a margin buy order and benefit from the difference between sell price & buy. You should note that You can incur losses in case your view on the particular stock goes wrong.
More on Margin product
All margin trades are intra-day orders and hence you must square off your positions by taking opposite positions about 30 minutes prior to closure of trading hours. In case you fail to close or square off your margin positions, virtual stocks system will automatically close such positions at prevailing market prices.