Some traders use existing investments as margin instead of keeping all their trading capital in cash. The general idea:
- You hold investments such as stocks, mutual funds or liquid ETFs.
- You pledge them with your broker to get collateral margin.
- That margin can be used for F&O trades, including algo strategies on Tradetron.
- Some traders park profits in liquid ETFs and pledge those too.
Risks to understand
- Pledged collateral has a haircut, so you get less margin than the holding’s value.
- Brokers may require part of the F&O margin in cash. Check your broker’s rules.
- Losses on margin-funded trades are real losses. If your account goes short of margin, the broker can square off positions or sell pledged holdings.
This is educational information, not investment advice. Check your broker’s pledge and margin rules before using collateral.
Edited with AI from the original Tradetron article, checked against current docs (Oct 2026). Spot something wrong? Tell us in the Community.