3 Easy Steps to trade in F&O (Equity Future Derivatives) at BSE, NSE, MCX

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An introductory article on Futures. Describes what a forward contract means along with a practical illustration of the concept. The article discusses the procedure for settling the forward contract. The article starts by discussing the drawbacks of Forwards contracts and progress to discuss how a futures contract overcomes these drawbacks. Examples are how to trade futures and options to make the concept clear.

The article explains how a trader can employ futures contract to financially profit from his directional view on a stock or an index. Practical examples are used to illustrate how the trade would evol.

This chapter discusses leverage, the central theme of futures trading in detail. The contract between futures and spot market is discussed. The chapter also touches upon leverage calculation. This chapter gives you all the necessary information that you need to know before placing your first futures trade.

The chapter also throws light into why brokers and exchanges charge margins. This chapter gives you an overview of how to use a margin calculator. In addition the chapter also touches upon spread trading such as calendar spreads. The chapter explains all that you need about shorting, be it futures or stocks with practical real life examples.

Emphasis is also made on things you need to take care of when you short stocks or futu. This chapter is a primer on trading Nifty Futures. All that you need to know about Nifty futures is discussed in this chapter including the impact cost, liquidity, and benefits of trading Nifty future. This chapter is a primer on how future contracts are priced with respect to the spot prices. The chapter also discusses the concept of premium, discount, and the convergence of futures and spot price.

This chapter gives a step by step instruction on how to hedge a portfolio of stocks with how to trade futures and options help of a futures instrument.

The chapter also has a detailed description on beta and method to calculate t. This chapter explores in details the concept of open interest and its relevance to futures trading.

The chapter also includes a guide on how to interpret the change in open interest with respect to ch. Background — Forwards Market An introductory article on Futures. How to trade futures and options to Stock Markets 14 chapters 2. Technical Analysis 20 chapters 3. Fundamental Analysis 16 chapters 4. Futures Trading 12 chapters 5. Options Theory for Professional Trading 23 chapters 6.

Option Strategies 13 chapters 7. Markets and Taxation 7 chapters 8. Trading Systems 10 chapters.

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A futures contract is an agreement to buy or sell a commodity at a date in the future. Everything about a futures contract is standardized except its price. All of the terms under which the commodity, service or financial instrument is to be transferred are established before active trading begins, so neither side is hampered by ambiguity.

Futures contracts are traded at a futures exchange and only at a futures exchange. There are currently eight futures exchanges in the U. The price of agricultural commodities fluctuates, foreign exchange rates change from minute to minute, interest rates and equity indexes rise and fall.

Nothing stays the same. And that's why futures are so useful and so essential to business operations all over the world. The study of the factors that affect supply and demand.

The key to fundamental analysis is to gather and interpret this information and then to act before this information is incorporated into the futures price.

This lag time between an event and its resulting market response presents a trading opportunity for the fundamentalist. This approach to price prediction is based on the premise that price movements follow consistent historical patterns. Those who engage in technical analysis study charts or statistics that measure price movements and try to find repetitive patterns. They start with the basic bar chart that plots high, low and closing prices of a futures contract over the life of the contract.

Current activity is watched carefully for familiar patterns of price movement. Orders in the Pit: A futures brokerage firm "house" that is a member of Chicago Mercantile Exchange CME places orders to buy or sell futures or options contracts for companies or individuals and earns a commission on each transaction.

Everyone who trades futures and options on futures contracts must have an account with a futures brokerage house, which is officially called Futures Commission Merchant FCM. Futures brokerages are not the same as stock brokerages, but some companies are licensed to trade both stocks and futures. Chicago Mercantile Exchange provides and regulates a marketplace where futures and options on futures are traded.

CME clears, settles and guarantees all matched transactions in CME contracts occurring through its facilities. All people who trade futures contracts are not speculators. People who buy and sell the actual commodities can use the futures markets to protect themselves from commodity prices that move against them.

Speculators assume risk for hedgers. Speculators accept risk in the futures markets, trying to profit from price changes. Hedgers use the futures markets to avoid risk, protecting themselves against price changes. Introduced in the s, an option contract allows you the right, but not the obligation, to buy or sell an underlying futures contract at a particular price. Futures prices are published for every trading session, and previous day prices are reported daily in major newspapers such as The Wall Street Journal Section 2.

The system offers computerized order entry and trade matching on a wide range of futures and options products, virtually 24 hours a day, to people around the world. The sign language of futures trading -- represent a unique system of communication that effectively conveys the basic information needed to conduct business on the trading floor.

The signals let traders and other floor employees know how much is being bid and asked, how many contracts are at stake, what the expiration months are, the types of orders and the status of the orders. All futures contracts have an expiration month; thus, there are standard hand signals that indicate each month.

A service of Stewart-Peterson Group, Inc.