What It Means
Leverage is using borrowed capital to control a bigger position than your own funds would allow — it multiplies your exposure to a stock's move, for better or worse, without requiring you to put up the full value yourself.
Example
With ₹20,000 of your own money and access to 4x leverage, you could take a position worth ₹80,000. A 5% move in your favor turns into a 20% gain on your actual capital — but a 5% move against you turns into a 20% loss just as fast.
Warning
Leverage doesn't just amplify your upside — it amplifies your downside by the exact same factor, and in facilities like MTF, it also carries a daily interest cost that eats into returns even before price moves against you.
Common Variants
- MTF (Margin Trading Facility) — leverage on delivery-based equity positions, funded by your broker against pledged shares, with no fixed expiry.
- F&O (Futures & Options) — leverage built into exchange-traded derivative contracts, which come with a fixed expiry date instead of an open-ended funded loan.