Haircut is the amount deducted from the total value of a stock. This protects the broker from unexpected price movement and volatility. Every stock has a pre-decided haircut percentage as per the broker’s internal Risk Management policy. For instance, if the total value of stocks in your portfolio is ₹1 lakh and the stock has a haircut of 10%, then the broker will give you ₹90,000 as trading margin.
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