MTF Calculator

What is an MTF Calculator?

An MTF (Margin Trading Facility) Calculator is a simple tool that shows how much extra buying power you get when using margin in the stock market. Let’s say you want to invest in a stock but don’t have the full amount; you can borrow some from your broker. This calculator not only tells you how much you need to invest and how much the broker will fund, but also estimates the additional returns you could earn by using margin trading.

It eliminates the guesswork and gives you a clear picture of both your investment and potential profits before you place your trade.

How Can an MTF Calculator Help You?

Knowing up front how much money you truly require and how much your broker gives you is essential if you trade using margin. An MTF Calculator does just that; it simplifies everything for you in a matter of seconds.

Here is why it is beneficial:

1. You do not have to guess how much margin you need to set aside because you know exactly how much to invest.
2. It displays your leverage, allowing you to see how much more purchasing power you can get with your current amount of money.
3. No last-minute surprises. It assists you in avoiding unforeseen fees, auto square-offs, and margin shortages.
4. Simplifies trade planning, depending on what the calculator indicates, you can adjust your quantity or stock selection.
5. Boosts your self-confidence and assists you in making wise choices, regardless of how long you have been trading or how new you are.

How Does an MTF Calculator Work?

Using an MTF (Margin Trading Facility) calculator is simple, even if you are new to margin trading. The calculator helps you estimate how much you can invest using your own funds along with borrowed funds from your broker and how much potential profit you could earn.

To use the calculator, you typically provide a few basic details such as the stock you want to buy, the buy and sell prices, the quantity of shares, and the holding period.

Once entered, the calculator automatically computes the total buy and sell value, your own investment versus borrowed funds, interest on the borrowed funds based on applicable rates, potential profit with and without margin, and expected returns on your invested funds.

It also considers the leverage offered on the stock and gives a clear picture of how using margin could amplify your gains or losses before you place a trade.

Formula to Calculate MTF Calculation

Even if you have never traded with margin before, using an MTF calculator is very simple. It does all the math for you; it just needs a few basic details.

This is what we fill in while using the MTF Calculator

• Search for the Stock Name 
• Buy Price
• Sell Price
• Quantity of shares you wish to purchase
• Holding Period in Days

When you enter these, the calculator immediately displays:

• Buy Value = Buy Price * Quantity of shares
• Sell Value = Sell Price * Quantity of shares
• Your Funds = Buy Value / Leverage
• Pocketful Funds = Buy Value – Your Funds 
• Interest Amount : The interest you pay depends on the applicable interest rate for your borrowed amount.
  • Up to ₹1,00,000: 5.99% (0.016% per day)
  • ₹1,00,001 – ₹25,00,000: 14.60% (0.040% per day)
  • Above ₹25,00,000: 16.00% (0.044% per day)

Interest Amount = Pocketful Funds * Holding Period * Applicable Interest Rate (Daily)

• Profit without MTF : Without using MTF, the buying power decreases.
  • Quantity without MTF = Your Funds / Buy Price
  • Buy Value without MTF = Buy Value * Quantity without MTF 
  • Sell Value without MTF = Sell Value * Quantity without MTF 
  • Profit without MTF = Sell Value without MTF – Buy Value without MTF – Total Brokerage Charges
• Profit with MTF = Sell Value – Buy Value – Interest Amount – Brokerage & Transaction Charges 
• Total Investment = Your Funds + Pocketful Funds
• Returns without MTF = Profit without MTF / Your Funds
• Returns with MTF = Profit with MTF / Your Funds

Note : The leverage associated with each stock is displayed on the screen (such as 4x, 5x, etc.). The calculations for brokerage and transaction charges and total charges have not been shown here. 

Example of MTF Calculation

Assume you want to purchase 100 shares of Reliance that are trading at ₹1,250 each and expect to exit your trade when the stock reaches ₹1,350, earning a ₹100 profit per share. You expect the stock will take 60 days to reach the target

This is what we fill in while using the MTF Calculator

• Search for the Stock Name : Reliance Industries
• Buy Price = ₹1,250
• Sell Price = ₹1,350
• Quantity of shares = 100 
• Holding Period in Days = 60

For Reliance , the leverage is 3.8x 

• Buy Value = ₹1,250 * 100 = ₹1,25,000
• Sell Value = ₹1,350 * 100 = ₹1,35,000
• Your Funds = ₹1,25,000 / 3.8 = ₹32,895
• Pocketful Funds = ₹1,25,000 – ₹32,895 = ₹92,105 
• Interest Amount : As Pocketful Funds amount is less than ₹1,00,000, then 5.99% p.a. or  0.016% per day interest day is applicable.

Interest Amount = ₹92,105  * 60 * (5.99%/365) = ₹907 

• Profit without MTF : Without using MTF, the buying power decreases.
  • Quantity without MTF = ₹32,895 / ₹1,250 = 26 
  • Buy Value without MTF = ₹1,250 * 26 = ₹32,895
  • Sell Value without MTF = ₹1,350 * 26 = ₹35,526 
  • Profit without MTF = ₹35,526 – ₹32,895 – 75 = ₹2,556
• Profit with MTF = ₹1,35,000 – ₹1,25,000 – ₹907 – ₹595 = ₹8,498
• Total Investment = ₹32,895 + ₹92,105 = ₹1,25,000
• Returns without MTF = ₹2,556 / ₹32,895 = 7.77%
• Returns with MTF = ₹8,498 / ₹32,895 = 25.83% 

Quite wonderful, isn’t it? You can create a trading position worth ₹1,25,000 with just ₹32,895 of your own capital. That’s the power of margin, but it’s important to use it wisely.

How to Use the Pocketful MTF Calculator?

When you want to see how much more stocks you can purchase using margin and what kind of returns or costs you’re looking at, the Pocketful MTF Calculator is extremely useful. What’s the best part? It’s very simple to use.

Here is how to do it: Enter the stock name, the buying price, the selling price, the number of shares you wish to buy, and the number of days you will hold your trading position.

That is it! from this point on, the calculator displays the results to you. It is a very good way to learn about margin trading before you place the order. You can quickly determine whether or not using MTF makes sense for you.

This calculator will help you in making more informed trading decisions, regardless of your level of experience. When you want to plan your trades or just want to judge how MTF increases your returns, the MTF calculator provides a quick and easy way to check.