Using borrowed money to trade stocks on the Pakistan Stock Exchange (PSX) is called leverage.
How it works
You want to buy PKR 100,000 of K-Electric Limited (KEL) shares.
Without leverage: You need PKR 100,000 cash.
With leverage (e.g., using Margin Trading System - MTS): You might only pay PKR 20,000 (your margin), and your broker lends you PKR 80,000. Now you control PKR 100,000 of KEL shares.
Why use it?
Bigger Profits: If KEL shares go up, your profit on PKR 100,000 is much higher than if you only invested PKR 20,000.
More Shares: You can buy more shares of companies with less of your own money upfront.
The Big Risk:
Bigger Losses: If KEL shares fall, your losses are also magnified. If they drop too much, your broker might issue a margin call, forcing you to add more cash or sell your shares.
In Pakistan, leverage is common in Futures (FUT), Margin Trading System (MTS), and Margin Financing System (MFS), all regulated by the NCCPL. It's a high-risk tool for experienced investors.