How to Use MTF to Buy More Stocks on Lemonn

Margin Trading Facility (MTF) on Lemonn lets you buy up to 4x more stocks than your available capital. This step-by-step guide walks you through everything – from prerequisites to placing your first MTF order, calculating your interest costs, and closing your position.

By the end of this guide, you will be confident enough to use MTF responsibly and effectively on the Lemonn platform.

Before You Start: MTF Prerequisites

Before you can place an MTF order on Lemonn, ensure you have the following:

• A fully activated Lemonn trading and demat account (free to open, zero AMC).
• MTF feature enabled in your account settings (one-time activation via e-sign).
• Minimum 20% of the total purchase value as available margin in your account (SEBI requirement).
• The stock you want to buy must be on the MTF-eligible list (2,200+ stocks available on Lemonn).
• A basic understanding of how leverage amplifies both gains and losses.

If your MTF feature is not yet activated, go to Profile > Settings > Margin Trading Facility in the Lemonn app and complete the e-sign process. It takes under 5 minutes.

Step-by-Step: Buying Stocks Using MTF on Lemonn

1. Open the Lemonn app and log in to your account.
2. Search for the stock you want to buy using the search bar. Verify it is MTF-eligible (an MTF badge or toggle will appear).
3. Tap on the stock to open the stock detail page. Review the current price, chart, and fundamentals.
4. Tap ‘Buy’. On the order screen, toggle ‘MTF’ to ON. This activates the margin trading option for this order.
5. Enter the quantity of shares you want to purchase. The screen will show your required own margin (typically 20-25% of total value) and the amount Lemonn will fund.
6. Review the order summary: total value, own margin required, borrowed amount, and estimated interest per day. Confirm the details.
7. Tap ‘Place Order’. Your order will be executed at market or limit price. The shares will be credited to your demat account and pledged as collateral automatically.

How to Calculate Your MTF Interest Cost

Interest on MTF is calculated daily on the outstanding borrowed amount. The formula is:

Interest = (Borrowed Amount x Rate x Number of Days) / 365

Example: You borrow Rs.50,000 at 10.95% per annum for 30 days.

Interest = Rs.50,000 x 0.1095 x 30 / 365 = Rs.450.6

So for a 30-day MTF position with Rs.50,000 borrowed, you pay approximately Rs.451 in interest. This is debited from your account – make sure your cash balance covers it.

MTF Interest Cost Table

Here is a quick reference table for estimated interest costs at different borrowed amounts and holding periods (at 10.95% p.a.):

Borrowed Amount	7 days	30 days	90 days	180 days
Rs.10,000	Rs.21	Rs.90	Rs.270	Rs.540
Rs.25,000	Rs.53	Rs.225	Rs.675	Rs.1,350
Rs.50,000	Rs.105	Rs.451	Rs.1,352	Rs.2,704
Rs.1,00,000	Rs.210	Rs.901	Rs.2,703	Rs.5,406
Rs.2,00,000	Rs.420	Rs.1,803	Rs.5,407	Rs.10,811
Rs.5,00,000	Rs.1,050	Rs.4,507	Rs.13,521	Rs.27,041

Note: All values are approximate. Actual interest is calculated on a daily basis and may vary slightly.

MTF Best Practices for Beginners

• Start small: Use MTF on a small portion of your portfolio first. Get comfortable with margin calls, interest accrual, and the psychology of leveraged positions before scaling up.
• Choose quality stocks: MTF works best with large-cap, fundamentally strong stocks that are less volatile. Avoid using MTF on penny stocks or highly speculative names.
• Set a target and stop-loss: Before entering an MTF position, decide at what price you will book profits and at what price you will cut losses. Stick to these levels.
• Monitor your margin: Check your MTF margin ratio regularly. If the stock falls, your margin coverage drops. Add funds proactively rather than waiting for a margin call.
• Factor in interest: Include the interest cost in your profit calculations. A stock that returns 10% in 6 months with 4x leverage sounds great – but if your interest cost is 5% of the borrowed amount, your net return is lower.
• Do not over-leverage: Just because Lemonn offers 4x does not mean you should always use 4x. Use the leverage that aligns with your risk tolerance.

How to Close or Repay an MTF Position

Closing an MTF position on Lemonn is straightforward:

• Sell the MTF stocks: Go to your portfolio, select the MTF holding, and tap Sell. The proceeds will automatically repay the borrowed amount, and any surplus returns to your cash balance.
• Partial repayment: You can also sell part of your MTF holding to reduce the borrowed amount and lower your daily interest cost.
• Add cash to reduce borrowing: Transfer funds to your Lemonn account. This excess cash will reduce the outstanding borrowed amount, thereby reducing your daily interest cost.
• The unpledge happens automatically: Once you sell all MTF shares, Lemonn will unpledge them and close the MTF position. You do not need to do anything separately.

Frequently Asked Questions