What is Intraday Margin - How to Use Leverage in Trading?

Intraday margin is one of the most important concepts for traders who buy and sell stocks on the same day. If you are into short-term trading, you may have heard terms like intraday trading margin, intraday leverage, or even SEBI’s latest margin rules for intraday trading. But what do these really mean, and how do they affect your trades?

This guide will help you understand what margin is in intraday trading, how leverage works, and how to use it wisely to manage risks.

What is Margin in Intraday Trading?

Before we go deeper, let’s first answer the question: What is a margin in intraday trading?

When you trade stocks intraday, you don’t always need to pay the full price of the shares. Instead, brokers allow you to trade by putting up only a part of the total value. This amount is called the intraday margin. The broker lends you the rest (leverage).

• For example, if you want to buy shares worth ₹1,00,000 and if your broker requires a 20% intraday margin, you only need ₹20,000. The broker effectively provides the remaining ₹80,000 as leverage for the day.
• You must close the trade before the market ends.

What is Intraday Margin and Why is it Important?

• It helps you increase your buying power.
• It creates opportunities for higher profits.
• It also brings the risk of bigger losses if trades go wrong.

For example:

• With ₹10,000 in your account and 5x intraday leverage, you can buy shares worth ₹50,000.
• If the stock rises 2%, your profit will be ₹1,000 (instead of just ₹200 if you had used only your own money).
• But if the stock falls 2%, you also lose ₹1,000.

That’s why understanding it is key, as it can work both ways.

How Does Leverage Work in Intraday Trading?

Leverage in this context means trading with borrowed funds from your broker. The broker gives you extra buying power by offering leverage, while intraday margin is the upfront amount you provide to access that leverage.

Here’s how it works step by step:

1. You deposit your margin amount with the broker.
2. By providing leverage, the broker enables you to buy more shares than your margin balance alone would allow.
3. You must close your position the same day before the market closes.

For instance:

• If your margin is ₹5,000 and the broker gives 10x leverage, you can trade worth ₹50,000.
• If the stock moves in your favor, your returns multiply.
• If it goes against you, your losses also multiply.

It is a double-edged sword. It’s powerful but risky.

SEBI New Rules for Intraday Margin

A SEBI report shows that 7 out of 10 retail intraday traders in the equity cash market end up making losses. With this thought, SEBI brought in new rules in 2025 for intraday margin. Below are the major changes and what they mean in practice.

Margin Collection Timeline Changed

• From April 28, 2025, brokers must collect most margins by T+1 (the next settlement day) instead of earlier T+2.
• This new timeline applies to all margins except VaR (Value at Risk) and ELM (Extreme Loss Margin), which still have to be collected before executing the trade.

Leverage Caps & Premium Rules

• Brokers are now restricted to offer a maximum leverage of 5x (margin of 20%) for intraday positions.
• Since February 1, 2025, buyers have had to pay the full premium upfront, with no leverage allowed for options contracts.
• On expiry days:
  • Spread benefits (calendar spread margins) are removed.
  • Option sellers must maintain an extra 2% Extreme Loss Margin (ELM) due to higher risk.

Margin Requirements & Restrictions

• A minimum of 20% margin (i.e., 20% of the transaction value) must now be deposited upfront by intraday traders.
• VaR margin: Minimum amount of margin that covers normal market fluctuations, must be collected before placing the trade.
• ELM (Extreme Loss Margin): Buffer for unexpected market swings; also collected before execution.
• Other margins, like exposure margin, must be collected by T+1.

Intraday Trading Restrictions

• Intraday trading will be banned for stocks listed in the ESM (Extreme Surveillance Measure) and T2T (Trade to Trade) categories.

Eligibility & Compliance Rules

• Traders must have both a trading account and a demat account, with all KYC formalities completed.

Benefits of Using Intraday Margin

Even with rules in place, intraday margin still has its advantages. Let’s look at the key benefits:

• Higher buying power: You can trade larger volumes even with small capital.
• Faster profits: Frequent small price movements can generate noticeable gains.
• Diversify : Margin enables traders to diversify across different stocks

Risks of Using Intraday Margin

While margin sounds exciting, it comes with significant risks too.

• Amplified losses: Just like profits, losses also multiply.
• Margin calls: If your account falls below the required margin, the broker may close your positions.
• Limited time frame: All positions must be closed within the same day by 3:15 PM.
• Emotional pressure: The fast pace can cause stress and poor decisions.

How to Use Leverage in Intraday Trading Wisely?

Using intraday leverage requires discipline and planning. Here are some ways to trade smarter:

• Start small: Don’t use full leverage in the beginning. Test with small amounts.
• Set stop-loss: Always fix a maximum loss limit to protect your capital.
• Strengthen your basics: Learn different types of analysis and have a concrete plan for entries and exits.
• Keep emotions in check: Don’t chase losses or get greedy after a win.

Difference Between Delivery Trading and Intraday Margin Trading

Many beginners confuse delivery-based trading with intraday margin trading. Let’s clear it up.

How Tradomate Can Help?

• As speed matters in intraday, Tradomate Screener can help you quickly build intraday focused screens in your natural language, reducing the time between spotting a setup and executing a leveraged trade.
• Use our news page to identify stocks with fresh, high-impact news so you can account for sudden volatility.
• Use alerts to notify you when an intraday setup triggers, helping you avoid late entries.

At Tradomate we strive to be not just a trade analysis tool but a trusted partner who guides you in navigating the markets with confidence. Whether you’re new to trading or already experienced, Tradomate helps you make smarter, more informed decisions.

Final Thoughts

The concept of intraday margin is simple but powerful. It allows you to trade with more than what you actually have, thanks to intraday trading margin and intraday leverage. However, it’s a tool that must be used with care.

With the SEBI’s new rules for intraday margin (2025), leverage is now more controlled, making trading safer for retail investors. Still, the risk of amplified losses remains.

If you want to succeed, focus on proper risk management, discipline, and continuous learning. Don’t see leverage as free money; it’s borrowed money, and it must be handled responsibly.

To know more, explore Tradomate expert’s trading blog section!