Add confidence in trading with futures contract

Trading in futures has the element of speculation when one tries to lock on the price of a security going up or down on a specific date. Speaking of which, a security can be in the form of a stock, stock index, commodity or currency. Unlike the investment in stock and bond, in futures the trader doesn’t own any commodity but speculates on the futures price of the security. Buying a futures contract involves two very important aspects of trading i.e. buying and selling. A trader sells his security when he predicts the prices are going to fall and buys when the trader expects prices going up.

A futures contract is standardized and it trading is done through a futures exchange in order to buy or sell underlying financial instrument at a certain date in price. The future date is referred to as delivery date. Delivery occurs in both options and futures contract but the delivery of the underlying commodity are rare as the generally contracts are closed before settlement. In a futures contract you can do equity trading and commodity trading and opportunities are endless with this dynamic financial instrument. 

Securities & Exchange Board of India (SEBI) is the apex body regulating the futures exchange and safeguard against traders from controlling the market in an unethical fashion and preventing fraudulent activities from overwhelming the market.

There are two categories in which the traders can engage in futures contract:

In general Hedgers utilize for shielding against radical future price movement in the underlying security. The objective of hedging is based upon the tendency of cash prices and futures value to move in tandem. It is done for minimizing the risks involved in the adverse movements in an asset. Normally a hedge comprises of taking an offsetting position in a related security such as the futures contract. 

Speculators are the second type of players in futures. These include individual traders and investors. Speculators in futures have distinct advantages over other investments. The success of speculation depends on the trader’s judgement and if so then he can make a lot of money in futures market because futures prices tend to change quickly then stocks or real estate.

Cross barriers and open new possibilities with Demat Account

During the last decade the stock market had transcended to electronic trading and the usage of paper certificates of shares has become the thing of the past as the maintenance of paper shares for trade and settlement is very cumbersome. The demat account has become an absolute must for online trading and now an investor can expand his portfolio to commodity and currency along with other securities.   

If you want to participate in an Initial Public Offering (IPO) and have a piece of the pie then you must open a demat account and have all the knowledge related to this process. A demat account is like a depository that holds your shares electronically. There are two apex depositories in India the National Securities Depository Ltd (NSDL) and the Central Depository Services Ltd (CDSL). And there are over a hundred Depository Participants (DPs) in India and they act as agents for the NCDL and CDSL are empowered to open demat accounts for their customers.

Just like opening a savings account with a bank you will have to open a demat account with a stock broker of your choice. In the demat account your physical shares will get converted to electronic form and every purchase and sale transaction of shares and securities are will be involved with will be done through the stock exchanges BSE (Bombay Stock Exchange) and NSE (National Stock Exchange). Where you will have the privilege to invest in the stock of some of the big players with large market capitalization listed in the stock exchange. 

We will now discuss on the documents you will need to open a demat account with the help of your broker – 

•    By mandate of SEBI a trader has to submit a copy of their pan card and they should produce the original  at the time of verification.
•    Proof of residence and identity has to be duly produced to your broker.
•    You will need passport size photographs. 

Your broker will provide you the demat account opening form and after you had fully signed and attached the required document for account opening then within a short period your account will be ready for you to start trading in the most dynamic wealth creation avenue of trading in the stock market.
 

Take Advantage by Trading in Online Commodities

Trading in futures commodities is an agreement to buy or sell an amount of a commodity at a predetermined price and date. In futures contract a buyer seek to avoid the risks involved in market price variations of the commodity, whereas, the seller tries to capitilise on the opportunity of market fluctuations by locking in on a suitable price on their raw material.

But this highly profit earning investment option has it’s pitfalls, as it may not be a good idea for an inexperienced trader to go for futures contract, as the large amount of leverage is too great and slight variations in the prices of the commodity may result gaining high profits or high losses while comparing with the margin you had started out with.

There are many commodity broking firms who offer commodity trading in future contracts and many have good trading platform for faster and secure transactions, and they generally have quality research to empower a trading in making wise and timely decisions on insightful information on the commodities market.

The more sophisticated the trading platform, the better it is for the trader in buying and selling of commodities online. Benefits like real time news and market updates, instant confirmation on order placed, easy customization of portfolio, facility to make a phone call and order execution of order etc.

There are a few very lucrative commodities like Gold and Silver and traders love to invest in these futures contracts as the market and it’s volatile nature itself presents excellent opportunites to make huge profits in a short duration.     

Trading in futures commodity is a very simple affair as only a trading account needs to be opened with the help of a broker and you can start trading in Gold and Silver with an initial investment called margin.