What is margin in trading?
Margin is the money blocked to hold a leveraged position — for shorts, futures and commodities. Learn how margin works on Nifty Paper Trade.
Margin is the amount of your virtual cash that gets blocked to hold a leveraged position. You don't pay the full contract value — you set aside a deposit that covers potential loss, and it's released when you close.
When margin applies
- Buying options: no margin — you just pay the premium (that's your max loss).
- Selling/writing options: margin blocked (risk is larger). See short selling.
- Futures (index/stock/commodity): margin blocked — a % of contract value.
- Intraday stocks (MIS): leverage via margin.
Why it matters
Margin is what lets a small balance control a big position — powerful but risky. If you hold several margined positions, your free cash drops; run out and new trades are blocked (see why can't I place a trade). Your used margin and free cash show in your portfolio.
Deeper read: lot size & margin in options.
FAQ
Do I need margin to buy an option?
No — buying an option only costs the premium; margin applies to selling, futures and intraday.
What happens to blocked margin when I exit?
It's released back to your virtual cash, along with your profit/loss.
Why was my order rejected for margin?
You didn't have enough free cash to cover it — reduce lots or add virtual cash.