What is the primary reason for charging margins in trading?

To generate revenue for brokerage firms To cover administrative costs of trading To manage and mitigate potential risks To discourage excessive trading activity

Which system is responsible for evaluating margin requirements and approving trades?

Order Management System (OMS) Risk Management System (RMS) Trade Execution System (TES) Central Depository System (CDS)

What key information is NOT typically provided to the RMS when placing a trade?

Contract type and quantity Desired buy or sell price Intended trade duration Stop-loss order level

What is the risk associated with holding a futures position overnight?

Liquidity risk Market impact risk Overnight risk Operational risk

How does providing more information about your risk appetite affect margin requirements?

It has no impact on margin requirements It leads to higher margin requirements It leads to lower margin requirements It may lead to higher or lower margin requirements depending on the specific information provided

Which product type is suitable for holding a futures trade for multiple days?

NRML MIS CO BO

What is a key characteristic of the MIS product type?

It allows holding positions overnight It requires specifying a stop-loss order It is specifically designed for intraday trading It offers the lowest margin requirements among all product types

Which product type requires specifying both a stop-loss order and an intraday trading timeframe?

NRML MIS CO BO

How does a Bracket Order (BO) differ from a Cover Order (CO)?

BO allows holding positions overnight, while CO does not BO requires specifying a target price, while CO does not BO has higher margin requirements than CO BO is only available for options trading, while CO is available for futures trading

What is the purpose of a trailing stop-loss order?

To limit potential losses To secure profits as the trade moves favorably To enter a trade at a specific price point To automatically exit a trade at the end of the trading day