How to Choose the Right MTF Stocks for Leveraged Trading
How to Choose the Right MTF Stocks for Leveraged Trading
Blog Article
When using the margin trading facility (MTF), not every stock on the exchange is eligible. Brokers maintain a curated list of MTF-approved stocks based on factors like liquidity, credit rating, and regulatory guidelines.
Here’s how to choose the right MTF stocks:
Check Broker’s MTF List: Always trade from the list of approved stocks to avoid margin rejections.
Look for High Liquidity: Stocks with good trading volume are safer for leveraged positions.
Monitor Volatility: Pick stocks with controlled and predictable price swings.
Use an MTF Calculator: Before placing a trade, calculate margin required, interest cost, and potential ROI.
Set Stop-Losses: Protect yourself against large losses from sudden price dips.
Sectors like banking, IT, and FMCG often contain reliable MTF stocks. As with any leveraged strategy, it’s best to test the waters gradually and avoid overexposure.
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