What is MTM in Upstox? Example
Short Answer
MTM in Upstox refers to "mark to market" and is used to determine the margin between the market value and the book value of an asset. It records the value of an account with respect to the change that takes place in its assets and liabilities due to price fluctuation in the market.
Detailed Answer
MTM helps in measuring the fair value of a commodity and is mostly used while trading F&O stocks and Mutual Funds.
MTM is calculated on the basis of Negative and positive. A rise in the price of security means positive MTM and a fall in price indicates negative MTM. It is debited and credited from your account accordingly. The goal is to keep a sufficient margin while trading. It helps in minimizing the trading risk and is calculated on a daily basis.
There is a standard risk level maintained termed as SPAN (standard portfolio analysis of risk). If this level is crossed, a margin call is made by Upstox to the trader notifying about the negative balance in the account.
How to calculate MTM on Cash position?
To calculate the MTM on cash position, take the following steps:
Step1: Note the cash available.
Step2: Find out the margin for the product you're dealing with
Step3: Multiply the cash with the margin available.
Step4: If the value after trading is less than the cash position, it is a negative sign and a warning call is made by Upstox to the trader.
Step5: These warning calls are made on every 10% MTM loss. When it reached 80% the client is forced to put in more money.
MTM on Cash Position Example Explained:
Let's look at an example:
Suppose you have 20000 cash and dealing with F&O stock. In Futures trading, Upstox provides a 5x margin.
So, (20,000 x 5) =1,00,000. Thus the total exposure is Rs. 1 lakh for intraday.
On that trading day, you bought 100 shares of Tata at Rs.1000 and later sold the same at Rs.900
(100 shares x -Rs.100)=10,000. It shows that you incurred a loss of Rs.10,000.
So, comparing with the actual cash position, 20,000-10,000=10,000 i.e 50% less.
You will receive a warning call from Upstox in this case.
How much margin does Upstox provide?
A brief description of Upstox margins in different financial products:
Equity: There is a 25x margin provided on all NSE and BSE securities that are listed on the NSE-FO market. The margin exposure for securities not on this list but has a 20% circuit limit breaker, a 2x margin is provided by Upstox. apart from this, no exposure is given to any securities.
NSE and Currency Futures: Trading in futures is allowed for up to 20% of the applicable span plus exposure amount. If you wish to carry it forward, you would require 100% of the applicable margin.
Options: Full premium amount is required by Upstox for buying and a 5x margin is given for selling options. Comprehensive margin records are available on the broker's dropbox account.
MCX commodity: For trading is MCX futures, a 3x margin is provided by Upstox for both buying and selling.
Note: No such leverage or margin facility is available for MTF (margin traded facility) shares. However, the client needs to submit a margin if any MTM loss is incurred on the MTF shares.
Ask Your Query for FREE, Get quick answers from our FINTRAKK community!
Discussion (9)
are you sure that you didn't already buy an option ?
After what happen you pay 73k or 17k..same problem hear
MTM- Mark to Market compares a management's actual valuation to its market value. When dealing commodities or Futures & Options, it is a significant unit. It was estimated in both positively and negatively. A positive MTM is when the value of a commodity rises, while a negative MTM is when the price goes down. To be specific- MTM= Real Value- Book Value.
Need More clarification with example
Mark to Market or MTM is an important denomination while trading in derivatives or Futures & Options. Here, MTM denotes the overall Profit or loss, a particular position is making in real-time. A positive MTM denotes a Profit in the position and a Negative MTM denotes a Loss in the respective positions.
The difference between the actual value to the book value of your securities is determined through MTM. It's quite a proper terminology given that you can easily find the difference in profits or losses in your investments in the F&O segment.
MTM is Mark to Market, commonly used in recording the value of assets according to its current market price. It is mainly used in F& O and you can measure a security's real market value. Also, Real Value - Book Value = MTM Margin I hope I am correct in explaining this in brief.
Mark To Market is a way to measure the market value of a security as compared to what is its value in the books. So it basically reflects the value of an account when the value of your assets and liabilities changes with time.
Yes, Upstox is safe, good and a very reliable stock broker for trading and long term investing. Being registered with SEBI, NSE, BSE, MCX and CDSL the stock broker has built a good reputation and a decent customer base over the years.
While looking for a discount brokerage firm for my requirements(Long term investments, intraday investments, F&O investments), I came across Wisdom Capital Discount Broker in India.
With every stockbroker, there are some advantages and disadvantages. The cons of Upstox are plenty but covers up through its advantages. However, its disadvantages are that the trade and call feature is charged 20 rupees, IPO & FPO investment opportunities are not available, under the delivery segment, GTC & GTD orders aren’t supported, etc.
When talking about the best stock broker in India, we cannot rule out Zerodha. It is the market leader in bargain stockbroking, is premised in Bengaluru, and accounts for more than 15% of total retail trading activity in the country. Mr. Nitin Kamath formed the leading brokerage firm in 2010 Kamath, and it now has a customer base of over 6 million.
Talk of square off in Upstox or any other stock trading platform in India it points towards completion of your intraday transactions. Let's see how it is! The meaning of square off remains the same whether its Upstox or any other stock broker in India for that matter.
Although everything the Stock broker offers is fantastic, there are a few downfalls of using Groww. These include the exception of trading in the commodity segment, doesn’t have a savings account in 2-in1 accounts that it offers, popular financial tools such as cover orders bracket order aren’t available, and more.
Upstox is a great discount stock broker that provides excellent features at a lower cost. Some of the benefits of using Upstox are margin against shares, free equity delivery, ultra-low brokerage, bracket order, and cover order availability, mutual without any commission fee, excellent trading platforms, and more.
There are some definitive drawbacks when it comes to using 5paisa. These include high brokerage fee, average customer services, the absence of 3-in-1 accounts, and more.
Discount brokers have gained a lot of popularity in the past couple of years. Zerodha is currently India's largest and most trusted discount broker which is also the best option for beginners. It has all the necessary qualities required for a good broker like low commissions, low-maintenance charges, high-quality trading terminal, etc.
Yes, the Indian discount broker is backed by Mr. Ratan Naval Tata. He held a 1.33% stake in RKSV Securities (popularly knows as Upstox) at the beginning of the year 2019. RKSV in RKVS Securities stands for the initials of the names of founders (RK for Ravi and Raghu Kumar, and SV for Shrinivas Viswanath).
sathi reddy
I trade in upstox options,but it in hold,that time I loaded 17k,and next day it shows in my 73k loss