mtf stocks are shares that are approved for trading under the Margin Trading Facility (MTF)—a service offered by stockbrokers that allows investors to buy stocks by paying only a fraction of the total value upfront. The remaining amount is funded by the broker, giving traders the power of leverage.
Not all stocks are eligible for margin trading. Brokers curate a list of MTF-approved stocks based on certain criteria to manage risk effectively.
Criteria for MTF Stocks
Brokers typically include the following types of stocks in their MTF list:
High liquidity: Stocks that are traded actively on NSE or BSE.
Strong fundamentals: Well-established companies with a stable track record.
Low volatility: To reduce the risk of sudden price swings.
Approved by SEBI: Regulatory compliance is a must.
Why Choose MTF Stocks?
Leverage Advantage: Buy more with less capital.
Extended Holding Period: Unlike intraday trading, you can hold MTF positions for days or weeks.
Increased Profit Potential: If the stock moves favorably, returns are magnified.
Key Considerations
Before trading MTF stocks, consider the interest costs, potential margin calls, and always calculate expenses using an MTF charges calculator. While the rewards can be higher, the risks are also amplified due to leverage.
In summary, MTF stocks offer an exciting way for active traders to maximize gains, but they require disciplined risk management and a strong understanding of how margin trading works.