MTF (Margin Trading Facility) lets you buy more shares than your cash allows — your broker funds the rest and charges daily interest, typically around 0.03–0.05% per day (≈9–18% a year), depending on the broker. It's powerful for swing trading, but the interest quietly eats returns, so your journal must track the funded amount and the true cost.
Margin Trading Facility (MTF) is a SEBI-regulated product that lets you buy stocks by paying only part of the value upfront — the initial margin — while your broker funds the rest. The shares you buy are pledged as collateral until you repay or sell. In plain terms: MTF turns limited capital into larger buying power, and you pay interest on the borrowed money.
It's only available on a defined list of liquid stocks and ETFs (SEBI's Group I securities), and it typically offers up to around 4–5x buying power, depending on the stock and broker.
How the interest works
This is the part traders underestimate. Interest is charged daily, on the funded amount only (not your whole position), from the day after purchase until you square off. Rates vary by broker — broadly in the range of 0.03% to 0.05% per day, which works out to roughly 9% to 18% per year. The longer you hold, the more you pay.
A worked example
Say you want a position worth ₹4,00,000 but have ₹1,00,000 in cash. Under MTF, your broker funds the remaining ₹3,00,000.
At an interest rate of 0.04% per day on the funded amount:
- →Daily interest = ₹3,00,000 × 0.04% = ₹120 per day
- →Hold for 10 days = ₹120 × 10 = ₹1,200 in interest
- →Hold for 30 days = ₹3,600
That ₹3,600 comes straight out of your profit. If the stock moved up 2% (₹8,000 gain on the ₹4,00,000 position), your real gain after interest is ₹4,400 — and if the stock went sideways for a month, you paid ₹3,600 to hold a position that did nothing. (Rates differ by broker, so check yours — some are as low as ~0.025%/day, others higher.)
Why most journals get MTF wrong
Generic journals treat an MTF buy like a normal delivery trade. They record the entry and exit price and call it a day — completely missing the funding cost accruing underneath. That means your journal shows a profit the market gave you, not the profit you actually kept. For a swing trader holding leveraged positions for weeks, that gap is the difference between "this strategy works" and "this strategy works before interest."
What your journal must track for MTF
- →Funded amount — how much the broker lent on this position.
- →Daily interest accrued — and the running total as you hold.
- →Holding days — interest is a function of time, so this is half the cost.
- →True net P&L — outcome after interest, brokerage, STT, GST and stamp duty.
- →A clear MTF tag — so you can review MTF trades as their own category and see whether the leverage is actually earning its cost.
The honest question MTF forces you to ask, every time: did this trade make more than it cost to fund? You can only answer that if your journal tracks the cost.
QbarTrade is built around Indian market realities — it tracks your MTF funded amount, accrues the daily interest automatically, and folds brokerage, STT, GST and MTF cost into your true Net P&L, per position and per broker. No spreadsheet gymnastics. See MTF tracking · Try the brokerage calculator.
Educational content only, not investment advice. MTF uses leverage and can amplify losses as well as gains.
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