Maximizing Trade Returns with Margin Trade Funding (MTF) for Momentum and Swing Traders 

Margin Trade Funding (MTF) is a powerful tool for traders who seek to amplify their returns by borrowing funds to increase their purchasing power in the stock market. While MTF is beneficial for various trading strategies, it holds unique advantages for momentum traders—those who capitalize on price breakouts and significant market movements. By using MTF, momentum traders can leverage their capital to significantly boost returns. 

Let’s explore how momentum traders can use MTF effectively and how this can lead to higher profits with real-world examples. 

What is Margin Trade Funding (MTF)? 

MTF allows traders to borrow funds from their broker to increase their purchasing power and take larger positions than they could with their own capital. At Navia, traders can avail of MTF with attractive interest rates, enabling them to maximize their returns without having to move large amounts of capital upfront. 

Advantages of MTF with Navia: 

● Low Interest Rates: Starting from 14.99%, making it cost-effective for traders. 

● Leverage: Upto 3X leverage. Allows traders to multiply their exposure with limited capital.  

● 1000+ Scrip: Trade & invest in 1000+ scrips with Margin Trading Facility on Navia. 

● Easy Pledge Process: You can pledge your holding to get MTF benefits easily. 

● Integrated Order Flow: You’ll be able to choose MTF in the existing Order Placement flow that’s simple & easy! 

● Dedicated MTF Section: View shares bought via MTF in a dedicated section in your holdings. 

● Sell Instantly: Sell from MTF order screen instantly without the need for separate un-pledging 

How Momentum and Swing Traders Can Leverage MTF with Navia 

Momentum traders rely on price breakouts to generate profits, and MTF allows them to increase their exposure during these breakout periods without needing additional capital. Let’s break down how Navia’s MTF can be effectively utilized by momentum traders: 

🔸 Amplified Gains on Breakout Trades: Momentum traders often buy or sell when a stock breaks through resistance or support levels. With MTF, traders can increase their position size during these breakout opportunities and magnify their gains. 

For example, if a momentum trader identifies a breakout in a stock priced at ₹100 and expects it to rise to ₹120, they can use MTF to increase their purchase from 1,000 shares (with their own capital) to 3,000 shares (using MTF leverage). 

🔸 Better Capital Utilization: With Navia’s single margin for equity and commodities, traders no longer need to maintain separate margins for different segments. They can trade equities during the day and switch to commodities in the evening using the same margin, making the most of their capital throughout the day. 

🔸 Cost Efficiency with Low Interest Rates: While leveraging capital through MTF involves an interest cost, Navia’s low interest rates starting from 14.99% ensure that traders can borrow at a competitive rate, keeping the cost of borrowing manageable even for short-term trades. 

Example: Boosting Returns with MTF for a Breakout Trade 

Let’s consider a real-world example where a momentum trader uses MTF to take advantage of a breakout in a stock. 

Scenario 1: Trading Without MTF 

Trader’s Capital: ₹1,00,000 

Stock Price: ₹100 

Stock Purchased: 1,000 shares 

In this case, the trader uses ₹1,00,000 to buy 1,000 shares at ₹100 per share. Now, suppose the stock price rises to ₹120, the trader’s total profit is: 

Profit: 1,000 shares x (₹120 – ₹100) = ₹20,000 

Return on Capital: ₹20,000 / ₹1,00,000 = 20% 

Scenario 2: Trading with MTF 

Now, let’s assume the same trader opts to use MTF to increase their position size: 

Trader’s Capital: ₹1,00,000 

MTF Leverage (3X): ₹2,00,000 borrowed from the broker 

Stock Purchased with MTF: 3,000 shares (using ₹3,00,000 in total) 

With the same breakout, if the stock price rises to ₹120: 

Profit: 3,000 shares x (₹120 – ₹100) = ₹60,000 

MTF Interest Cost (for 30 days): ₹2,00,000 x 14.99% / 12 = ₹2,498 

Net Profit after Interest: ₹60,000 – ₹2,498 = ₹57,502 

Return on Capital: ₹57,502 / ₹1,00,000 = 57.5% 

Comparison: 

Without MTF	With MTF (3X leverage)
₹20,000 Profit	₹57,502 Profit
20% Return	57.5% Return

As seen in the example, by using MTF, the trader increased their capital efficiency and multiplied their returns. Even after accounting for the MTF interest cost, the returns are significantly higher. 

MTF Trade Comparison for 7, 15, and 30 Days 

Duration	Capital Used (₹)	MTF Borrowed (₹)	Total Investment (₹)	Profit (₹)	Interest Cost (₹)	Net Profit (₹)	Return on Capital (%)
7 Days	₹1,00,000	₹2,00,000	₹3,00,000	₹60,000	₹574	₹59,426	59.4%
15 Days	₹1,00,000	₹2,00,000	₹3,00,000	₹60,000	₹1,230	₹58,770	58.8%
30 Days	₹1,00,000	₹2,00,000	₹3,00,000	₹60,000	₹2,498	₹57,502	57.5%

Explanation: 

In each scenario, the trader uses MTF to triple their exposure in the stock, increasing their profit potential. 

The interest cost grows as the duration increases (from 7 days to 30 days), but the net profit remains significantly higher than if the trader had used only their own capital. 

The return on capital for the trader after utilizing MTF is far higher than what would be achievable without leverage. 

Key Takeaways for Momentum and Swing Traders Using MTF 

→ Increased Profit Potential: By leveraging capital, momentum traders can take larger positions during breakout opportunities, increasing their profit potential. 

→ Cost-Efficient: With Navia’s low interest rate (starting from 14.99%), traders can borrow funds at a manageable cost, boosting their overall returns. 

→ Flexibility in Capital Usage: MTF allows traders to keep their own capital available for other opportunities while using borrowed funds for a specific trade. 

→ Extended Trading Hours: With single margin across equity and commodities, traders can capitalize on equity breakouts during the day and commodity opportunities in the evening using the same margin, enhancing flexibility. 

Summary: Benefits of MTF for Momentum and Swing Traders 

Feature	Trading Without MTF	Trading with MTF (3X leverage)
Capital Used	₹1,00,000	₹1,00,000 + ₹2,00,000 (MTF)
Stock Purchased	1,000 shares	3,000 shares
Profit on Stock Price Increase	₹20,000	₹60,000
MTF Interest Cost (30 days)	₹0	₹2,498
Net Profit after Interest	₹20,000	₹57,502
Return on Capital	20%	57.5%

Final Thoughts: Why Momentum and Swing Traders Should Use Navia’s MTF 

Momentum traders thrive on speed, breakouts, and the ability to capture large market movements. By using MTF on the Navia platform, traders can significantly amplify their gains without having to lock in large amounts of capital upfront. With low interest rates and easy process, Navia’s MTF is a valuable tool for any momentum trader looking to maximize their potential returns. 

If you’re looking to leverage your capital and boost your returns using breakout strategies, MTF with Navia can be the key to unlocking greater profit potential in your trades. 

DISCLAIMER: Investments in the securities market are subject to market risks, read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Brokerage will not exceed the SEBI prescribed limit.