DSE Margin Loan Calculator

What is Margin Trading on the Dhaka Stock Exchange?

Margin trading allows investors to purchase more shares than they could with their available cash. Essentially, your brokerage house provides you with a loan using your existing shares and cash as collateral. In Bangladesh, this is a common practice used to amplify potential returns.

How Margin Ratios Work in BD

The Bangladesh Securities and Exchange Commission (BSEC) sets the overall guidelines for margin trading, but individual brokers may have their own stricter rules. Common ratios include:

• 1:0.5 Ratio: For every Tk 1 of your own cash, the broker gives you Tk 0.50 as a loan. Your total buying power is Tk 1.50.
• 1:1 Ratio: For every Tk 1, you get Tk 1 as a loan. This doubles your buying power (Total Tk 2.0).

The Cost of Borrowing (Interest)

Unlike cash trading, margin trading is not free. You must pay interest on the loan amount provided by the broker. Current interest rates in Bangladesh typically range from 12% to 14% per annum. Interest is calculated on a daily basis and usually charged to your account at the end of each month.

Risk Management: The Margin Call

The biggest risk of margin trading is a "Margin Call." If the market value of your portfolio drops significantly, the ratio of your own equity to the total value of the portfolio decreases. If it falls below a certain maintenance level (e.g., 125% of the loan amount), the broker will ask you to deposit more cash or sell shares to rebalance the account. Failure to do so may result in forced liquidation.