What is the futures market
The promise of settling the deal towards the traders by the due date in future is called futures market. Settlement of the deal is done on a fixed date in the futures market. Deals in the futures market usually settle in a month. In the futures market, prices are determined by the laws of supply and demand. Settlements take place on the last Thursday of every month. The settlement date is called the expiry date. Traders can also rollover their deal for the next month if they wish. There are two types of futures markets - futures and options.
What is derivatives ?
The futures market is traded in derivatives. Derivatives include stocks, index, metal, gold, crude, currency. For trading in futures trading, one must have derivatives.
What is the future?
Trading in the market for less money is possible through futures. Trading can be done only after depositing margin money. Margin determines the exchange. Future trading is for a month. In the future trade, every day there is a book of profit and loss. In case of loss, the broker has to compensate the trader. Future trading takes place in indexes or stocks. The futures trade at a premium to the cash market. Future is the work of experienced traders. Future hedging is also used.
What is the option?
In the option, traders have some trading options. 1 series of option trading is of 1 month. The shares in an option, their number, price are decided in advance. But trading time is not fixed. Trading in options can take place at any time in 1 month. There are 2 types of options - Buyer option and Seller option. The option buyer has several rights. While these rights get a premium. The option buyer has to pay the price for these rights. There are 12 series of option trading in a year. Often the option seller is the only beneficiary in the 9–10 series. Option seller is considered smarter.
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Future trading in the index:-
The index includes Cessanx and Nifty. Trading in Nifty futures is more. At the end of the series, futures and spot prices are equal. The delivery of index futures in India is not settled. Delivery of stock futures is possible. Index futures are always cash settled. Technical and fundamental have a big impact in deciding the direction of index futures.
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Benefits of trade in index futures:-
Index futures are easy to track. Larger trade is possible with less money. The margin in index futures is also low. Nifty futures have a margin of only 7-8 per cent. Bank Nippy Futures provide considerable volume. There is also a lot of trade in the IT index.
What are stock futures?
Stocks traded in futures are called stock futures. The list of these shares is prepared by the exchange. Stock futures can be traded only after SEBI approval. Stocks are included in stock futures by looking at market cap, volume and liquidity. Currently 250 stocks trade in stock futures. Larger positions are possible in stock futures for less money. FIIs, domestic institutional investors invest more in stock futures. Futures are always traded in lot sizes. It is necessary to purchase at least 1 lot. The value of a lot is usually around Rs 5 lakh. Large investors invest in stock futures due to volume and liquidity.
Options trading:-
Trading an option comes in two ways: call option and put option. The option consists of buyer or seller. Bayer buys rights, sells cellar rights. The seller is paid a premium in return. Trading in an option is of a premium. The right to buy is called a call option. The call for selling rights is called a put option. Deals in an option are for a premium. Options have different strike prices.
Risk Factor in Futures Market:-
Do research before trading in the futures market, because the risk in the futures market is high. RD documents have to be signed before trading. The risk is high in short selling. Short selling works for more experienced people. The risk in futures trading is higher than in the cash market. There is more risk, more profit in the futures market. Investors should not start trading in futures trading, but rather in the cash market. Because you may have to fill the extra margin in case of loss. In futures trading, traders must have liquidity. Exchanges increase margins when there are high volatility.
Precaution in futures trading:-
While trading in futures, take care of stop-loss. Do not trade during big events. Trade in options while trading during big events. Get into futures trading only after learning the cash market trading pattern. Start with the index. Start trading with options in the index as well. Initially trade with 1 lot. Initially trade according to learning. Trading in Nifty options is a good option.
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