Margin trading lets you take a larger position than your available capital by borrowing the rest from your broker, using leverage. For example, 5x leverage on intraday trades means you only need to put up 20% of the position value as margin, letting you control a bigger position with the same capital — but losses are also magnified proportionally.

Futures contracts are settled at a future date and only require a percentage of the total contract value (typically 20-25%) as margin, since the exchange collects margin to cover potential losses until settlement. Delivery (cash market) trades require full upfront payment because you are buying actual shares to hold, with no leverage or settlement risk to the exchange.

If the margin in your account falls below the required maintenance level due to adverse price movement, your broker can issue a margin call and, if not met, forcibly square off (auto-close) your position to limit further losses — potentially at an unfavourable price.

Yes, because leverage amplifies both gains and losses. A small adverse price move can wipe out a much larger percentage of your invested margin compared to an unleveraged delivery trade of the same stock. Margin trading (especially intraday and futures) should be approached with strict risk management.