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Manage risk with stop loss orders when margin trading

A trader app can give you enhanced freedom as an investor or a trader. With this new-found freedom you may find it easy to venture into uncharted territory where trading is concerned, not knowing about potential outcomes of your activity. Many new traders have made significant errors of judgement in their early days of trading only to discover losses. If you are considering day trading as an activity and wish to undertake margin trading to afford your trading, then you should know a thing or two about it first.  

The Trader App and the Trader

Whether you make use of the top trading app or not, the way you trade counts for a lot. Your performance may be influenced by the facilitation of rapid trading activity that you may enter without a second thought. Apps give you this advantage, especially user-friendly interfaces like those on the MO Trader app. When you perform certain kinds of trading, say margin trading, you should be aware of your trading activity and know the implications of it. 

Margin trading is often employed by a host of traders as it lets you trade stocks, buying shares you cannot afford. You partly pay for these shares, and the rest, the margin, is paid for by your broker. The margin is typically settled afterwards, at the time you can square off your positions. However, margin trading can be risky if you make a loss, but your gains can be much more than your margins and you can make significant profits. In order to mitigate losses in margin trading, you can think of a stop loss method of executing trades. Without this, you may be quite unsafe in terms of the risk of loss.

Margin Trading and Stop Loss

After you open a Demat account, you can choose to trade for the long term or the short term. You can be engaged in both durations of investing, and if you are interested in trading for the short run, you can engage in margin trading. Margins can help you magnify your returns, but can also enlarge your losses. Having a trader app at your disposal may propel you into margin trading, but you must play it safe at the same time. 

One way to undertake margin trading is to introduce a stop loss action to control how much you may spend on the borrowing of a margin from your broker. Therefore, you may be interested in buying a stock with the provision of a margin from your broker, but a stop loss enables you to curb your purchase if the stock goes beyond the price you have maintained with a stop loss facility. Essentially, a stop loss order is one that you place with your broker, to purchase a stock once it reaches a particular value, and not higher. In this way, you control how much of an amount you have to borrow from your broker. On the MO Trader app, you can use margin trading to ford your trades in a secure way. 

Trade Made Less Risky

In margin trading, you are effectively borrowing cash to buy your stock. The margin that is made up by your broker has to be paid back by you whether you make a profit or a loss. Additionally, you are charged interest on the amount you owe. Considering this, you must ensure you take calculated risks while margin trading. When you open a Demat account with Motilal Oswal, you can make use of margin trading and get tips to trade on potentially profit-making stocks. 

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account | 7 Benefits of Trading through an Online App | 6 Rules to Follow While Using Options Trading App 

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