Hello sir,I have a query about margin traded funds in equity segment.if I tok shares in MTF with margin and went to delivery then what is liquidation process if price moved opposite position.it is said if amount is gone down more than 20% then it will get liquidated.can anyone explain me with simple example.it will be much helpful.
I have 16000 amount and I want to invest in Wipro with MTF,and hold .then what will be my liquidation price .now as the price is 412 when writting this,how can I know the liquidation price of dhan.
If the coverage ratio falls below 20% your holdings will get liquidated. To explain with an example:
A client had Rs. 25,000, he bought a stock of worth Rs. 1,00,000 with 4X leverage provided by Dhan.
Now, if the value of stock falls to Rs. 93,000 client will be squared off as per below formula:
Combined Ledger : -75,000
Holding Full Value: 93,000
Holding Coverage = (-75,000 + 93,000) / 93,000 = 19%
Thanks for reply…I understood the model,but is there any tool to calculate the liquidation price so that where I can make a stop loss point.for example if I entered a share at 512 say with 4x MTF with initial capital of 20k.then if price too downtrend say 508 and may go futher down,then how can I know the liquidation price.here in my case 80k will be available for me to trade and I want to go for delivery which for some days I am profitable in my positions,due to volatility in market i am hovering in profit and loss and not sure of next upcoming days about trend and I wanted to keep but with a stop loss.how can I calculate the liquidation price mam.is there any tool available in dhan to evaluate my entry exit points.if there any please let me know.thank you.