For any business, one needs to invest some amount, which is known as the capital for the business. Every business has different requirements of capital, and one who wants to go for the concerned business needs to invest that much amount under any situation. Usually, those who have limited capital cannot go for businesses that require a high amount of capital. Hence many people seek a business that can be done with low investment. Another important factor that affects the business is risk associated with it. Every business has one or other type of risk with it, and one needs to consider the same before going for the concerned business. Those who have limited capital cannot go for a business which has high risk involved. Looking at the risk and capital required, trading in the stock market can be a good option for many.
Investment and exposure:
After opening a Demat and trading account, one needs to fund the account. On the basis of the margin money that is the fund provided to the account, the concerned broker can offer exposure to the client to trade in the market. The share market has one segment, which is known as intraday trading, where one can trade with low capital and get chances to earn more profit regularly. For a trader who wants to go for bulk trading with low investment, it is necessary to have more exposure offered by the broker.
Check the margin money required first:
In this market, every broker, as well as broking firm, has different rules and practice for the margin money and exposure offered to the client. A trader with low investment needs to find a broker who can offer more exposure to him with the lowest margin for intraday trading so that he can have more opportunities to make a grand profit.
The broker offers a limit to the margin money funded by the client. In some cases, it can be 10 times of margin money while in some other cases it can be 20 times also. sometimes the broker also offers more limit after having regular dealing with the client and knowing his trade pattern. This can prove much useful to the client as he can go for bulk trading where he can make money even if he cuts the position at a narrow profit.
Is there any risk associated with more exposure?
There are two types of risks associated with more exposure. The client may go for bulk trading and trade with a wrong decision may lead to a heavy loss if he is given more exposure. In such a case, the client’s financial profile may also get ruined. In another risk, when the client has to bear the loss which is more than his margin money, the broker has to forfeit the margin money and plus need to cover additional amount to fulfil the loss. In such a situation, it can prove troublesome for the broker to get the rest of the amount from the client, and he may have to struggle hard for the recovery of the concerned amount.