“IT’S ALL ABOUT FUTURE TRADING "!!
Future contract is a contract to buy or sell particular asset for specific price for pre determined time period.
In future contract u do not invest in any security … its purely trading for pre determined price. For example if u r buying September future the pre determined time period will be last trading Thursday of that week. We will understand this in detail later on.
Technical Definition:
“A futures contract is a standardized contract, traded on a exchange, to buy or sell a certain underlying instrument stock or indices, at a certain date in the future, at a specified price.”
If you buy a futures contract, it means that you promise to pay the price of the asset or security at a specified time. If you sell a future, you make a promise to transfer the asset to the buyer of the future at a specified price at a particular time.
Practically future trading is form of trading which involves speculating on the price of stock (like ril, sbin, dlf) or indices(like nifty future bank nifty cnx it ) .. And this speculation is based on the events, technical supports and resistance and other factors like natural disaster some political changes and many others...
This was basic knowledge about future trading. U can say definition. Now have a look at some other aspects in the future trading.
When u r starting future trading. It is must that you know each and every fact about future trading. Future trading is one of the most thrilling things in stock exchange. You are about to begin journey where you must rely on your common sense and ingenuity, and face challenges that require intelligence, strength, and an adventuresome spirit."And most importantly, You should have proper technical guidance.” There are risks, but a future trading is a journey where the rewards justify the risks. If you have proper guidance you can have maximum out of future trade..!!
Ok... Now i would like u to explain some technical terms in future trading. These terms are used very frequently and it’s important to understand them as a future trader.
In all our terms... The current market price will be our spot price. We will take spot price as base price and understand the important terms.
First of all... Future contract
Future contact can be the underlying asset or instrument. This could be anything from a barrel of crude oil, gold bees or a specific stock or share. We are going to discuss trading in stocks.
After that will continue with the term called Premium:
We hear people around us they say … "ril future at premium ...” "Premium is 10 Rs " .. What does it mean? The price of future is generally higher than spot price... The basis is usually negative, which means that the price of the asset in the futures market is more than the price in the spot market.This is because of the interest cost, storage cost, insurance premium etc., that is, if you buy the asset in the spot market, you will be incurring all these expenses, which are not needed if you buy a futures contract. This condition of basis being negative is called as 'contango'. Familiar word is "premium”!!
For example.. When ril October future is 2120.. And spot is 2080 we will say ril oct future is in premium..!!
Second imp term in future trade is … Discount:
Sometimes it is more profitable and preferable to hold the asset in physical form than in the form of futures. For e.g.: if you hold equity shares in your account you will receive dividends, whereas if you hold equity futures you will not be eligible for any dividend. When these benefits overshadow the expenses associated with the holding of the asset, the basis becomes positive (i.e., the price of the asset in the spot market is more than in the futures market). This condition is called 'backwardation'. Backwardation generally happens if the price of the asset is expected to fall. We know this "backwardation" as "discount"...
For example.. When ril October future is 2060.. And spot is 2080 we will say ril oct future is in "discount”..!!
We have heard people talking about Lot size:
Lot size is the pre determined amount and units of the underlying asset per contract. This can be the weight of a commodity like a kilo of gold gram of silver, a fixed number of barrels of oil, units of foreign currency, quantity of shares, etc. For example for infosys future lot size is 200 pre determined.
Next important term is …. Settlement day:
It is common that, as the futures contract approaches maturity, the futures price and the spot price tend to close in the gap between them ie., the basis slowly becomes zero. We know this condition as "square off". Means if you are long (buy) in some derivative.. You have to sell it at the end of the contract...That is last Thursday of any month..This day is known as "settlement day."
One of the most imp terms in future trading is Margin:
The reason that futures trading can be so profitable is the high leverage. To ‘own’ a futures contract an investor only has to put up a small fraction of the value of the contract (usually around 10-20% but can be 50% too. It depends on the volatility of the security we r trading…) ... We know this small fraction value as "margin"..! We all know future trading as margin trading too!! Margin is the biggest advantage for future trader if you use it properly. But u trade heavily over limit just before you trade on margin.. It can be the worst trade for you and your family!!
Ok friends... We have seen different terms of future trading..Now let’s come out of the book .. And see what is happening in real life future trading.
A future trading is a business that gives you everything you've ever wanted from a business of your own. It is the world's perfect business. It offers the potential for unlimited earnings and real wealth on the margin money!! So your return on investment is always higher it you are earning. Now talk about intraday (one day) and positional (3- 10 days ) future trades..For futures traders, one of the best suggestions they can take in order to be successful is to follow the trends.Many futures traders trade without a plan. Even if they have a plan, they second guess it and make the mistake of not sticking to it--especially if the trade is a loss.After several profitable trades, using futures trading facts, many speculators become fierce and radical, basing their trades on hunches, and long shots rather than intelligible reasoning. Anyone is buying or selling futures contracts should clearly understand that the risks of any given transaction may result in a futures trading loss.Money management is as important as being correct in the market.Successful futures traders are good businessmen and good money managers.
There are two basic categories of future traders..
Hedgers and speculators.
In general, “hedgers use futures for protection against adverse future price movements in the underlying cash commodity. The rationale of hedging is based upon the demonstrated tendency of cash prices and futures values to move in tandem.”
Means they use future position against their delivery.. for example.. If they have 300 ril delivery at 2100.. And LTP is 2150.. And ril is expected bad result and because of that sentiment.. Price of ril is expected to go down to 2000 again.. They will not sell that delivery..But they will sell future one lot of ril and will cover it at 2000. So they will not lose tht 100 rs gap... And they don’t need to pay more brokerage and other costs.
Speculators are the second major group of futures players. These participants include independent traders and investors. For speculators, futures have important advantages over other investments, they can trade in future quantity on margin and they do not need to pay any interest on the same !!
That is why future speculation is so popular..! People can enjoy full profit on margin money..!!
Sometimes it is bigger than margin money too if you have proper guidance ..!! And team stock researchers provide you this guidance at cost of 6600 rs / 2 month.
If the trader's judgment is good. ..He can make more money in the futures market faster because futures prices tend, on average, to change more quickly than real estate or stock prices, for example. On the other hand, bad trading judgment in futures markets can cause greater losses than might be the case with other investments. And this is where you need team stock researchers.
One can ask why we need such financial service.. If i m running my business I can do this too..!!
But the fact is...Today's futures market has also become a major financial market. Participants in futures trading include mortgage bankers, carpenters , farmers, and dealers, as well as grain merchants, food processors, savings and loan associations and individual spectators.
There are some negatives of future trading.. Future trade is high risk high return trading market.
If you enter the market without any guidance it can be risky for your wealth. Some risks are there but they can be avoided.
You have to follow some basic rules in future trading..
You should not convert your intraday trade in positional trade and vice versa!!
Always use stop loss and target.
Trust your financial advisor and don’t choose their trade.. !! Trade whatever he says.
Trade with trends.. In future market e have other benefits too like… it is highly liquid market.. Transaction cost is lower than any other businesses… initial investment is also lower than any other business in India. Unlike other market …. We can make profit in slowdown also.. With technical and logical know how from professional stock advisor.
Now let me tell u something about TSR future intraday service with your permission.
Daily 2-5 calls will be given by team stock researchers number of calls is depended on market condition and volatility.
All call updates will be given here I chat room as they ached target or hit stop loss.
All calls will be given with stop loss and target and will be given via both messenger and sms.
Daily report as well as cumulative report of total
Profit and loss will be updated daily on this blog.
You can get extra benefit of joining TSR as marketing association plan (map). I would like to invite you all to be part of tsr family and work with us as marketing partner and get life time money back benefit.
To know more about MAP please mail me now my email id : mituldoshi@live.com/ or call me and talk personally . My number is 098247-43153.
This chat session will be released soon at www.future-friend.blogspot.com
To join any premium service mail us on contact@niftyviews.com/ or call hiren personally,now 09327744250.
Hope you all like the session. Thank u.
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