1. What exactly is the interest cost in margin trading?

It is the charge your broker applies to the borrowed amount when you buy shares using margin funding instead of full cash.

2. How is the interest amount calculated in India?

The interest equals the borrowed amount multiplied by the annual rate and days held divided by 365. Most brokers calculate this daily.

3. Does the interest stop if I hold the stock for a long period?

No. Interest continues every day until you exit or convert the trade to full delivery. The longer you hold, the more you pay.

4. Can interest costs reduce my profit?

Yes. Even if the stock goes up, the interest on borrowed money can reduce your gain or turn a good trade into a loss.

5. How can I reduce interest costs while using margin trading?

Keep holding periods short, borrow less, and choose brokers offering lower rates. Always compare the interest cost with your expected returns.

Interest on Margin Trading

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Interest on Margin Trading

Margin Trading

Interest on Margin Trading

When you borrow funds from the broker for margin trading an interest on margin is charged by the broker on a fixed rate depending on the amount borrowed.

Ridhima Gandhi | Oct 29, 2025, 03:17 PM

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