What is the Commodity Trading Strategy in India?

Are you considering stepping out into the world of commodities trading in India?  Before you begin, please take heed.  Many have tried and failed before you.  Accounts have been wiped out in an unspectacular fashion by as little as one or two bad trades.  This article will give you some important advice on how to avoid the common mistake made by many who have gone before.  Only a few dedicated and disciplined individuals are destined to succeed on this battlefield.  Maximise your chances of being one of those successful ones by doing things slowly and carefully rather than aimlessly jumping in with both feet.

The most crucial action you need to take is to hold back your eagerness to begin trading and calmly take some time to draw up your Commodity Trading Strategy.  This is a plan which will help you visualise your horizon and help to lead you there.  The thing to remember is that a plan is only of any use if you abide by it.  Discuss this with your broker or Portfolio Manager and ensure you put the effort in early to design the best commodity trading plan to suit your needs. Lay it out on paper.  Refer to it regularly and do not deviate or pull away from the rules you set yourself.  If necessary the plan can, and should be revisited and revised as you become a more experienced trader and possibly ready to accept more risk. On the other hand, if you are suffering losses you can always tighten the plan to limit the risk until you feel more comfortable.

A very useful thing to do, which will help you to tweak your plan is to keep records of every single trade you do.  As you do more and more trades you can start to build up a chart or a graph to illustrate where you entered and exited.  This will be invaluable in helping you identify patterns and discovering where you are making mistakes.  By looking back to see where you went wrong, you can decide what not to do next.  Traders who do not plan, and do not look back to evaluate their past trades are essentially carrying on regardless with no clear focus on where they are headed.  They will repeat mistakes that have already been made before as they have not taken the time to realise what they have done.  

How much should you begin trading with?  This question has no right or wrong answer.  Many new traders start off with relatively small amounts, less than 10 lakh rupees for example. Some advisors will say that is not enough and will point out endless examples where small accounts like this have been wiped out in no time at all.  In actual fact, although the statistics do show that these low-value beginner accounts frequently do get wiped out, it is not necessarily due to the fact that they are low-value to begin with.   Another more plausible likelihood is that these traders are just dipping their toe in the water and are not properly prepared for what they are getting into.  They will most likely not have proper plans and strategies in place to help them avoid the pitfalls that are so often fallen into by novice traders.

A lot of what goes into your commodity trading plan will be based on information from you, yourself.  There is no one-size-fits-all plan to suit everybody (if there was, everybody would be getting rich).  This will depend on factors such as whether you want to be a long-term or short-term trader.  In line with how much profit you decide to aim for, balanced against how much risk you are prepared to accept, you should decide fixed points to stop and sell (limiting loss) and be sure not to go below your own limits.  It is a difficult thing to let go and accept the loss but your plan will need to have rules for such situations.  Starting with a larger amount in the first place certainly will make it easier to ride the losses and get back on track, but even when trading with a small initial investment, it is possible to stay out of danger by ensuring the loss you deem acceptable to bear is at least equal to or preferably less than the profit you intend to gain.

Last but by no means least, is to keep a keen eye on the market rates of the commodities you may be interested in trading in.  Remember that markets go up and down, due to various factors.  It is never wise to keep all your eggs in one basket.  Even if you are an expert in one particular commodity, you would not wish to assign your entire trading account to that one commodity only.  Diversification is a great way of limiting loss by the effects of steady and reliable stock helping to ride over the loss suffered by unreliable and unpredictable stock.  With this in mind, study well and have a serious think about the types of commodity trading you may wish to get involved in.

Good Will India are one of the top online commodity trading platforms in India.  Their helpful and knowledgeable staff are only ever a phone call away.  Should you be contemplating investing in commodities trading in India, you would find it very beneficial to talk it over with a Good Will expert who can clear your doubts and give you the information you need to allow you to make an informed decision as to whether or not commodities trading would be a wise venture for you.  Call Good Will India on +91 80122 78000 today.

What is the future of Real Estate Investment?

Real estate is considered to be an immovable asset.  In most cases it refers to an area of land (naturally this must be a fixed location).  It can include assets contained on or in the land.  Examples would be buildings, minerals, other natural resources, crops upon the land and the water within the land.  Real Estate has traditionally been a reliable investment option seen as less risky than investment in other areas such as stocks and shares.  But is it wise, at this moment in time to be considering investment in Real Estate in India?

Real Estate has never been a fool-proof form of investment, there is no such thing, but it could be considered harder to make a loss in this area than in others.  The price of prime Real Estate has for most of history increased in value to the extent that it outgrows the negative effect of inflation.  There have been exceptions to this rule.  When speaking about India specifically, we can take the Indian ‘property bubble’ of 2001-2007.  Around this time it seemed that there was no stopping the Real Estate sector, as buildings were being constructed, and money was being injected at record levels.  It was speculated that a lot of the funding for these projects was sourced from black money.  When the ‘property bubble’ broke due to over-availability of commercial and residential buildings that nobody wanted or could not afford, the result was that several large property development companies defaulted on their loans.  Several developments were seized by creditors and auctioned.  The following years saw a slump in prices as they were slashed to encourage buyers to take up the unoccupied buildings. 

If this is the case then why invest in Real Estate? In 2016 the Real Estate (Regulation and Development) Act, 2016 came into being.  This Act of parliament lays down several important rules that aim to make the building and construction elements of Real Estate more transparent and safer for home-buyers.  Previously home-buyers were being taken advantage of by builders, and many found themselves in problematic circumstances when builders defaulted on loans that were taken out under home-buyer's names.  The Act purports to stop the injection of black money into property developments by demanding that 70% of the money is deposited via cheque so that its origin can be traced.  All commercial and residential Real Estate projects over 500sq/m (or 8 apartments) must be registered with the Real Estate Regulatory Authority.  It also makes it mandatory for the carpet area of a property to be specified to the buyer.  This is to avoid the practice of builders stating built-up-area or even super-built-up-area measurements to confuse buyers into thinking the property has more use-able space than it actually does.

With the new Act serving to clean up the Real Estate Development sector, renewed faith in the market has seen it return to its usual self after the disaster of the ‘property bubble’ bursting.  With this in mind, we can confidently say that there are still future benefits of Real Estate investment in India.  But having said that, we must be mindful of how to invest in Real Estate.  Careful consideration must be given to the location chosen to ensure maximum return on investment.  Even the best luxurious accommodation will be in low demand if it is constructed in a remote area devoid of amenities or work prospects.  Land in such areas may seem cheap, but there is a reason for that; low demand.   Even the oldest, poorest condition building may be worth a lot of money due to its location if the area is desirable.  One trait among Indians is that they like to stick together.  The cost of housing is inflated by the desire to live close to family members.  Houses in older, more established areas often sell for much higher prices than equivalent or even better living accommodation in new developments for this very reason.  There are multiple ways to be a winner with Real Estate.  There are many options.  Here are just a few examples:

• Purchasing plots to leave them undeveloped and sell on at a profit when development grows up around them

• Purchasing existing buildings in order to earn money from rent (passive income)

• Purchasing plots to develop. Adding value by constructing buildings then selling or leasing them.

• Purchasing land that is rich in minerals or natural resources and then selling the rights to mine or extract the resources

• Purchasing farm land and then profiting by sale of the crops.

In any of the cases where the land is to be re-sold, the most important consideration to be made would be to make sure you purchase in an upcoming area.  It will be necessary to study the area in depth before taking any big decision.  Prices are driven up by demand.  Buying early when there is very little demand will enable you to buy for a low rate.  As an area becomes developed and established the demand rises and so does the value of the land.  Choosing the best area will depend on such factors as local amenities, availability of jobs, threat of natural disasters, flood defense, water availability, connectivity to road and rail networks, and many more.  You will be best advised to avoid areas which are experiencing a downturn in their fortunes.  Sometimes areas which were once posh and upmarket become run down and turn into slums.  The famous saying goes ‘always buy the worst house on the best street, never the best house on the worst street’.  The saying makes note of the fact that it is relatively easy to tidy-up or recondition a building therefore increasing its value, but it is not usually possible to make a building desirable if it stands in an undesirable location.  Unless you can purchase the entire street you are unlikely to be able to have any power to reverse an area’s slump into decay.

Before taking any big decision, it is always worth getting the opinion of an expert.  Talking through the pros and cons of any big financial investment will help you to make an informed decision based on market facts and experience.  Buying a family dwelling for the purpose of living there, with no intention ever to sell is a completely different situation from buying purely to sell at a profit.  There are instances where buying Real Estate is a sensible option as part of a balanced investment portfolio, to counteract the risk of investing in other fields, or simply to compensate for the rate of inflation.  Decisions should not be made on impulse or with emotions running high.  It is recommended to discuss your ideas with a professional portfolio manager and not simply rely on the words of property brokers, builders or sellers who have no consideration for your best interests and simply want to sell their property to you.

Investment Advisory: https://gwcindia.in/

Do Political Changes Affect the Share Market?

Political changes do not affect the stock market itself, but the actions of the traders affect the stock market.  The actions of the traders may be influenced by what they have seen or heard about political changes happening or said to be happening in the country.  Short-term fluctuations due to trader uncertainty and confusion may occur, but usually are quickly ridden out, and the market settles itself again.

It is important for long-term investors to concentrate on their long-term goals and not get tied up with worrying about short-term fluctuations.  India is a democratic country and elections will keep happening every five years at the least, so we cannot shy away from stock market trading simply because of this unavoidable recurrence.  In fact statistics show that despite some surprising outcomes, the last six elections in India have had little effect for those who invest in stock market. 

Looking back into the history of the tenures of Indian governments, some which collapsed within days or months, the figures speak for themselves and demonstrate that the stock market almost carried on regardless of the political landscape.

During the 1989-90 tenure of V. P. Singh, the Sensex actually shot up by 73% in only 11 months.  And this was under the regime of a Socialist Prime Minister who is known to have given his acceptance to the recommendations of the Mandal Commission.  This is a clear warning that anyone considering investment in share market should not fall for the labels that the media attach to Prime Ministerial candidates such as ‘business-friendly’, ‘reformer’, ‘socialist’ etc.  History has proven these to be nothing but red-herrings.

Take for example the 1991 election which resulted in a minority Congress government headed by P. V. Narasimha Rao plus coalition members.  This leadership group was labelled as being ‘anti-market forces’.  However, if one was to compare the market returns during this regime to the market returns under the Rajiv Gandhi-led regime of 1984-89 (Gandhi having been elected with a strong majority), it becomes apparent that returns of over 20% occurred in both instances.  This example goes to prove that whether or not a minority or a majority government happens to be in power, it does not seem to adversely impact on the market.  This is counter to most people’s assumptions that a minority government would be bad for traders.

Historians and commentators have noted that despite political parties and leaders having fierce rivalries driven by strong political ideologies, their stance on business does not differ greatly in real terms.  Under the rulings of successive governments, the journey of the stock markets in India has been calmly taking the same course.  It has not been often that the decisions of one leader in regards to finance and business matters have been outright reversed by a successive government.  All governments appear to be heading in the same direction when it comes to developing India’s economy.  Their political ideologies do not tend to interfere with this, so other than micro-fluctuations, the long term view does not change to any great extent. 

The important point to keep in mind is that regardless of all the turmoil that Independent India has witnessed, (foreign currency crises, threat of war, conflict over Kashmir, collapse of governments to name a few example causes), the markets have still never generated negative returns, and that is a fact.

Anybody considering getting into share trading in India would be wise to investigate onlineshare trading.  The benefits of trading using an online platform are manifold and include the ability to make instant transactions from your mobile device, save time by bypassing the middleman, real-time tracking of your portfolio allowing instant overview of its performance, and access to online tools and calculators that help you make informed decisions.

GOODWILL INDIA are one of the best places to begin your foray into online trading.  We are well placed to cater for the needs of the new investor.  Our resources and courses will provide you with valuable knowledge and skills to ensure you get off to the best possible start.  Why not contact us now? Our friendly and supportive advisors are waiting to take your hand and lead you through the door to your future.

What are the Future Benefits of Investment in Gold?

Gold has been used to make ornaments and jewellery for millennia. Prior to 2016, the oldest gold artifact thought to exist was a piece of jewellery from the copper age, found in a necropolis at Varna on the Bulgarian Black Sea in 1972.  That was until a gold bead found in Southern Bulgaria was assessed by experts as being around 200 years older still, dating it from around 4500-4600 B.C.

The human love affair with gold is clearly not a new phenomenon.  But aside from its aesthetic beauty and industrial uses, gold plays a large part in the financial systems of the world.  Let’s take a look at how.

GOLD STANDARD

As gold is so rare, useful, and desirable, it has inherent value.  Being durable, portable and divisible meant it was idea for use as a currency in the earliest financial systems.  Pieces of gold were exchanged for goods and services going back more than 6000 years.  Later this evolved into struck gold coins.  With the advent of paper money, the United States of America tied their dollar to the value of gold.  To achieve this, the maintained a ‘gold standard’ which was a huge stock of gold that correlated to every dollar in circulation.  Paper notes therefore directly represented an amount of gold that the bearer was entitled to demand from the government upon surrender of the paper notes.  Many countries followed this example, but today this system is no longer used.

BULLION

Bullion is the name for quantities of gold which exist in the form of gold bars.  In this state they do not provide any practical function, but they are easy to manufacture, handle and store.  To be put to use they must be melted down and re-purposed.  Companies, individuals and governments may choose to store gold bullion as it is less a volatile asset than the legal tender of any given currency.

WHY IS GOLD SEEN AS AN INVESTMENT?

While currencies are subjected to inflation year on year by the issuing governments, gold follows no such suit.  1 crore rupees in 1990 has the equivalent purchasing power of 7.35 crores in 2019 because of the devaluation of the rupee over time.  Gold in fact follows an opposite trend, whereby the value has been seen to continuously rise over the years.  For example 10 grams of 24 karat gold in 1990 could be bought for 3,200 rupees.  The same 10 grams in 2019 would cost Rs.35,220.  This is why gold is often seen as the wise choice for investment as it can offset the effects of inflation that cash in the bank is subjected to.  If you are considering investing in gold in India 2020, it may well be a viable proposition for you.

THE DOWNSIDE OF INVESTING IN GOLD

Now that you are aware of the future benefits of investment in gold, you should also know about the negative points.  Just as the companies, governments etc. who hold gold bullion have to deal with keeping it safe, this also applies to the individual.  This can sometimes detract from the benefits of investing in physical gold.  Individuals are unlikely to already possess an industrial grade safe, electronic security systems and security guards.  Gold can be easily melted down and re-purposed, which means that if it is stolen it can very quickly become unidentifiable and is very difficult to recover.  Many banks and security companies offer safe storage in safe lockers and vaults, but the rental of these lockers comes at a price.

GOLD WASTAGE

India is at the top of world when it comes to gold jewellery.  Rather than hide gold away as bullion, ladies would much rather make it into some beautiful jewellery that can be worn, displayed and admired.  This desire to display the gold comes with its own risks.  Not only is theft or loss a real threat when the gold is being paraded in public or even at home, but the likelihood of placing it in secure storage every day is less, which increases the danger.  As fashions change and the jewellery changes hands from one person to another, they may express a desire to change the design or use the gold to make something new.  Not only does the goldsmith charge for his time in manufacturing the new piece, but a certain amount of the gold is inevitably wasted each time it is melted down and made into something new.  In the case of raw gold bullion being made into jewellery for the first time, additional metals are needed to be alloyed with the gold to make it strong enough to be used as jewellery.  These additional metals themselves cost money at the same time reducing the purity of the gold itself.

FRAUDULENT VENDORS

Checking the purity of gold is not something that can easily be done by the investor himself.  A trusted expert will need to check and confirm that the investor is actually receiving what he thinks he is purchasing, as there are many unscrupulous vendors who will try to pass off gold alloys as 24 karat, or exaggerate the percentage of gold contained in an alloy product such as jewellery.

How Risk Management Can Save your Trading Account

Commodity trading in India, or indeed any sort of stocks and shares trading, has an inherent amount of risk associated with it.  There will not be any trader who has not faced, or who will not face a loss of some degree at some point in his or her trading career.   Losses come as part of the package, but with careful planning they can be limited to such an extent that the trader’s entire account should not be wiped out.  Planning ahead to deal with losses before they occur is called Risk Management.

WHY IS RISK MANAGEMENT NECESSARY?
Without the implementation of risk management techniques, it would be incredibly easy for a trader to lose all their accumulated profits as a consequence of just one or two bad trades.  As we have already mentioned, losses are a given in the world of trading.  Losses can be overcome and worked through, but heavy losses can put an end to your trading account and mean you would have to begin again from scratch.  You will begin to appreciate the importance of commodity trading risk management.

Stepping out onto the path of online commodities trading is like beginning a long-haul flight.  You would not take-off without ensuring there was sufficient fuel in the tank.  Not only sufficient fuel, but enough RESERVE fuel to last you through any unforeseen complications and diversions along the way.  It can never be assumed that a flight will go smoothly from take-off to landing, as there are many variables that are beyond the control of the pilot.  Just as a flight without safety measures could be a death-trap, online trading risk management will be your safety measures to ensure you do not crash your trading account to zero.

RISK MANAGEMENT TECHNIQUES
Do not take big risks.  Excessive use of leverage has seen many a trader commit trading suicide by taking unnecessary and avoidable risks.  Never be over-confident, over-emotional or headstrong.  Always assume you could lose, and make sure you can cope with the loss.  Have a plan and stick to it.  Decide the price at which you can afford to buy and can afford to sell.  Do not make the trade if it does not fall within your planned limits.  Very rarely does a trader make his fortune from one or two huge trades.  More than making large profits on one trade, the success comes to those who can make small profits but do it consistently and regularly, while at the same time avoiding the losses.  

THE 1% RULE
A tactic used and recommended by many traders is called the 1% rule.  When following this, you should never put more than 1% of your entire capital into one trade.  This works for all occasions, as the value of the 1% will be higher depending on how much capital you own, but you will always be protecting the rest of your capital.

‘STOP LOSS’ AND ‘TAKE PROFITS’ TECHNIQUE
Decide in advance how much loss you can realistically afford to bear.  Sell when the stock reaches your cut-off point and bear the loss.  Do not let emotion take over and bury your head in the sand by convincing yourself that it will rise up again.  Decide in advance how much the stock needs to rise to before you will sell it and take the profit.  Do not get over confident and convince yourself that the value will keep rising further.  Sell at your cut-off point and be happy with the profit. Holding out for more can, and frequently does backfire.

If you wish to use this technique, you can use a calculation of [(Probability of Gain) x (Take Profit % Gain)] + [(Probability of Loss) x (Stop-Loss % Loss)] to calculate your expected return.  This is invaluable in helping you make the decision of whether or not to buy stock.

DIVERSIFICATION
Markets can be volatile.  It would be unwise to concentrate only on one commodity as an unexpected crash in value would be catastrophic for you.  If you diversify between several different commodities, at least it would be possible for the others to cover the losses suffered on one.

TAKE EXPERT ADVICE
For the inexperienced trader, this business of trading risk management may seem like rocket science.  Expert advice is always on hand from GOODWILL INDIA.  Their experienced staff pass on their expert knowledge to new traders in a way that makes sense to them.  Remember not to take-off that flight until you have safety precautions in place.  GOODWILL INDIA will provide you with the safety precautions you need to fly the right path to commodity trading success.

Why Is Demo Trading Bad for You?

WHAT IS DEMO TRADING?

Buying and selling stocks and shares are risky waters to dabble in if you have no prior experience or idea of how to do it.  Most people would prefer to learn to swim in the safe containment of a swimming pool rather than being thrown into the sea where there is real danger.  Certain brokers provide potential traders with access to virtual stock markets and give them virtual money to experiment with. This is known as a “demo trading account”. The manner in which the stock values rise and fall on these virtual stock markets is controlled by algorithms and have little or no link to what is happening in the real world stock markets, although they are designed to simulate situations that can possibly arise in real life.

WHAT IS IT’S PURPOSE

The purpose of allowing potential traders to experiment with ‘buying and selling stocks’ in a virtual environment with virtual money is to allow them to get a rough idea and feel for how the actual stock markets work in real life.  It can be useful in helping somebody decide if they really want to progress to using real money and trading in real stocks and shares.

HOW LONG SHOULD ONE USE DEMO TRADING BEFORE STARTING REAL TRADING?

There are varying views on this.  Some experts argue that nobody should involve themselves in demo trading at all, and the only way to learn is the hard way, i.e. being thrown in at the deep end, and launching yourself straight into the real stock markets.  Others maintain that a short period of experimentation with demo trading can be beneficial, not least in allowing the potential trader an insight into the way it affects their emotions, stress, lifestyle etc.  It can be enough to let you know that stock trading is NOT for you, and you will not have spent a single paisa.  Even the experts who are in favour of a little bit of demo trading, unilaterally seem to agree that indulging in it for too long can be detrimental in the long run.

WHY CAN IT BE BAD?

Trading in stocks and shares can be incredibly stressful, time-consuming, time-sensitive, and emotional.  It takes a certain kind of person who can manage the mental and physical strains that trading can bring with it.  Psychologists believe that trading in demo accounts does not trigger the same emotional response as real-life trading due to the fact that demo accounts do not use real money, and there is no actual benefit or threat to the trader.  Real money cannot be lost or gained, therefore an amount of apathy will present itself.  In real life, there is no place for apathy as a bad trade, or a missed opportunity can have devastating consequences.  

WHAT IS THE ALTERNATIVE TO DEMO TRADING?

Another option for new traders, which is recommended by some experts, is to go straight into trading in a live account but to begin with micro-amounts.  An initial deposit should last for a substantial amount of time and will give the trader real-life experience from the offset.  Trading in micro-amounts minimises the risks as the losses can only be small, but the experience of the real-life market is instant, and valuable time has not been wasted in playing with demo accounts which can themselves be environments where bad habits (which die-hard) are learned, and a false sense of safety can encourage risky trades.  There is really nothing like the real thing, to teach you the real thing.  As Warren Buffett has said “the more you learn, the more you earn”, which is quite right, but you need to ensure that you are learning the correct habits.

KNOW MORE

If you are interested to know more about demo trading in India, and its alternatives, GOODWILL INDIA will be able to help you.  We provide expert advice and help for new traders or those people who are considering becoming new traders.  We have special training courses specifically designed to ensure that potential new traders know exactly what they are getting into, and to teach them good habits from the very start.  Please head over to our website at  https://gwcindia.in/ or speak to one of our friendly advisors directly on +91 - 44 - 4020 5050.

What is Margin Trading in India?

WHEN MIGHT MARGIN TRADING BE USED?

What happens if you are very sure that you can make a good profit by buying and selling an item that you see advertised at a very reasonable price, yet you do not have the full amount of cash available to make the initial purchase?  You could easily miss the opportunity to purchase that item, as it will surely not be long before somebody with more money than you gets their eyes on it and snatches it away.  In a situation like this, you might well consider asking your friends and family to lend you the money to make the initial purchase.  If they have confidence in your knowledge of the product, they may well be happy to lend you the money for a small share of the eventual profit.


HOW DOES MARGIN TRADING ACTUALLY WORK?

Margin Trading is somewhat like the above example.  Once you have some experience and knowledge about the state of the stock market and you want to take things to a higher level without investing more cash, Margin Trading may be an option you wish to explore.  Let us now explain more about the concepts of Margin Trading.  Based on the above example, let’s assume you wish to purchase some stocks as you are confident that their worth will rise dramatically.  A qualified broker such as GOODWILL COMMODITY INDIA may be able to arrange for you to buy those stocks without stumping up all the cash.  They may arrange for you to make the purchase at a fraction of the actual price, on the agreement that the balance be paid to them at an agreed time.  If all goes according to plan, when the time to pay back the loan arrives, the stocks are speculated to have risen in value to such a degree that they can be sold on at a price that more than covers the original loan, and still results in a net gain for the trader.


FURTHER BENEFITS OF MARGIN TRADING

What makes Margin Trading even more attractive is that the Securities and Exchange Board of India (https://www.sebi.gov.in) has now made it possible in certain circumstances to conduct Margin Trading without putting forward any cash whatsoever and instead of using other shares you hold as collateral.  This can have the effect of generating a very high rate of return for only a small amount of capital invested.  It also gives you access to go for stocks that you would ordinarily be unable to afford, therefore it widens the opportunities for the trader.


WHAT TO AVOID WHEN MARGIN TRADING

You will now be aware of some of the benefits of the MTF (Margin Trading Facility), but as in all fields of life, one must be willing to accept the rough with the smooth.  That is to say that anyone considering availing of the benefits of MTF must also educate themselves of the associated risks involved.  As you are in effect borrowing money from your broker, there will be binding agreements in place which dictate what will happen should the value of the stocks you buy happen to go down instead of up.  Of course, they would expect you to settle the balance by injecting more cash, otherwise, they will usually reserve the right to take action against the borrower in order to recover their dues.  This is not limited to, but may include the liquidation of other assets in the Demat account or portfolio of the borrower.  There will also be a stipulated minimum balance that must be maintained.  The holder of an account that falls below the required minimum balance will be required to top up the account to avoid triggering the broker to take action.  For these reasons, it is advised to use the facility with caution to lessen the chances of finding yourself in such a situation.