Understanding trading limits is important for you to know, because this is closely related to the existence of capital limits in trading.
While the stock trading limit itself is able to show the maximum limit for customers and can buy shares on that day.
In other terms, the trading limit is the same as the maximum debt limit that you can use to trade (margin trading). So, so that it can be clearer, you can listen to the following description to the end.
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Understand the Definition of Stock Limit Trading and Its Purpose
Currently there are many people who are familiar with stocks, unfortunately many of them also do not know the meaning of these stocks.
Usually they know that stock is something that exists in the company and only people who can afford it can invest.
Of course, this is wrong or not true, because we can buy shares even though we use minimal capital. Shares are securities whose contents are related to the ownership of the company.
Well, to be able to maximize these trading abilities, trading limits can be the best choice for everyone.
Trading limit (TL) is a loan facility that will be given to customers in the form of transaction limits to buy shares.
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As before, the definition of trading limit or TL is the maximum limit of the customer’s capital in order to be able to buy shares on that day.
In other terms, trading limit is a loan facility for customers in the form of a transaction limit whose value is greater.
So if at any time there is a good enough time to be able to buy shares, but do not have a shortage of funds in RDN, then you can borrow from securities from the trading limit facility.
Usually the trading limit that you have in your trading account can also change every day and depends on changes in the value of the stock.
Well, because you take advantage of the leverage facility from securities, then you should be able to repay the debt.
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Example of Trading Limit
From a number of definitions of trading limits, now is the time for you to know what are examples of trading. For example, you now need 500 thousand in cash but want to buy an item for 1 million. So, you can get the remaining 500 thousand by way of debt.
While in the stock market, this 500 thousand worth of money is referred to as leverage (margin trading). However, there is a limit to the amount of money you can borrow.
For example, when you have a capital of 500 thousand, you can owe a securities company of 2 million in a day.
Then the trading limit owned by the customers in the trading account can also change every day. Meanwhile, using this leverage facility, you must also be able to pay off debt and interest.
From a number of definitions of trading limits that we have discussed, we hope that they can be helpful and useful for you. Especially if you are a beginner and are learning about stocks.