Leverage (MTF) lets you control more stock than your cash alone. This compares a leveraged trade against the same money in pure cash — after the amplified move, the broker's interest, and the transaction tax — and shows you how small a fall would trigger a forced sale.
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Capital left after a fall, including interest & STT
How much of your cash survives a drop, across holding periods. Amber = below your starting capital; red = below the maintenance margin (forced-sale zone).
What leverage really does to your money
- It multiplies the move — both ways. At 4× you control four times your cash, so a 10% fall in the stock hits your capital like a ~40% fall, before any costs. The gain side is multiplied too, but losses are what end accounts — a deep loss leaves far less capital to recover from.
- Interest is rent on borrowed money. Everything above your own cash is a loan, and it charges interest every day you hold — whether the trade wins, loses, or goes nowhere. Over a few weeks it's usually the biggest add-on cost after the amplified move itself.
- STT scales with the position, not your cash. Securities Transaction Tax is 0.1% on both the buy and the sell of a delivery trade. Because leverage makes you buy a bigger position, you pay it on the larger amount — roughly your leverage multiple times what a cash trade would pay. It's the smallest of the three drags, but it's real and can't be waived.
- The margin call is a trapdoor. If your equity slips below the broker's maintenance margin, the position is force-sold — you don't get to wait for a bounce. The "margin-call trigger" above shows how small a fall it takes; at high leverage it's often a single-digit percentage.
- Recovery is asymmetric. A 50% loss needs a 100% gain just to break even; a 75% loss needs 300%. Leverage reaches large losses faster, which makes the climb back disproportionately steep — that's the "recovery to get back" figure.
- Always read it against pure cash. The same move on an all-cash position costs you far less and can never be force-sold. Leverage isn't extra money — it's borrowed money with rent, a tax multiplier, and a floor your broker can pull out from under you.
The quiet drain. Even in a flat, going-nowhere market, interest and STT keep working against a leveraged position. The "break-even move" above is how far the stock must rise just to cover those costs before you earn a single rupee — on cash it's near zero, on leverage it's several times higher.
All figures are illustrations based on the inputs you enter, and assume the maintenance margin you set with 0.1% STT on each side of a delivery trade; your broker's terms will differ. Leverage (MTF) carries significant risk, including losses that can exceed your invested capital. This tool is for education only and is not investment advice or a recommendation to buy, sell, or trade on margin. FactFinances is an AMFI-registered Mutual Fund Distributor (ARN-144500) and does not provide securities advisory services. Verify all charges and margin rules with your broker.