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Tag: market volatility

  • What Market Volatility Indicators (VIX & IV) Are Telling Long-Term Investors Right Now

    Some days, the market moves slowly. Other days, it moves like someone lit a match under it. Up 200 points in the morning, down by lunchtime, and back in the green before the last bell rings. For long-term investors, this can be disorienting—not because they’re watching every tick, but because it makes it harder to know when to step in or sit still.

    Over the last few weeks, India’s equity markets have looked surprisingly strong on the surface. Nifty recently touched new highs. Sensex didn’t lag far behind. But underneath that strength is something else—a subtle tension that doesn’t show up in price alone.

    To see that, you need to look at two things: the Volatility Index (VIX) and Implied Volatility (IV). Neither of these are magic tools, but they do help you feel the undercurrent. And in a market that’s moving like this one, that undercurrent matters.

    What Is the Volatility Index (VIX)?

    Think of VIX as a mood meter for the whole market. It doesn’t tell you whether stocks will go up or down—it tells you how much movement investors are expecting, regardless of direction.

    A low VIX usually means people are calm. They expect the market to move slowly, if at all. A high VIX means tension. Maybe people are nervous. Maybe they’re uncertain. But they expect more motion—more swings. VIX is calculated based on Nifty options. If option prices start rising, it often means people are paying a premium to protect themselves from big moves. That pushes VIX higher.

    So when the market hits a new high, but VIX also ticks up? That’s a clue. Something doesn’t line up.

    What Is Implied Volatility (IV)?

    Now let’s zoom in a little. IV is like VIX, but more specific. It applies to individual stocks or particular options, not the entire market.

    If IV is high for, say, Reliance, it means traders think Reliance might swing sharply in the near future. If IV is low, they’re expecting it to stay steady. IV isn’t about what has happened—it’s about what might happen. It’s based on current option prices. And like VIX, it’s a reflection of expectation, not direction.

    So What Are These Indicators Saying Right Now?

    Here’s where things get interesting.

    As of late June, Nifty crossed 25,200. It looked strong. Momentum was there. But VIX stayed in the 12–14 range—low by historical standards. Meanwhile, implied volatility for some large-cap options—like Nifty weekly contracts—rose to around 15.5%. That’s a mixed signal.

    It suggests that even though the broader market seems stable, option traders are building in the possibility of sharp moves. And they’re not doing it for fun. They’re doing it because they’ve seen enough uncertainty—globally and locally—to hedge. For a long-term investor, this can feel like noise. But it isn’t. It’s context.

    The Calm Surface Isn’t Always the Full Story

    Let’s take a step back.

    Imagine you’re standing at a beach. The water looks calm. But someone who understands the tide will tell you: look at the pull, not the splash. That’s what VIX and IV offer. When the market rises with low VIX but high IV, it means there’s unease behind the optimism. People are buying, yes—but they’re also covering themselves, just in case. And for a long-term investor, that doesn’t mean “exit.” It just means: walk in with your eyes open.

    How Should a Long-Term Investor Interpret This?

    You don’t need to react to every tick. But you can use volatility cues to pace yourself.

    If you were planning to make a large lump-sum equity investment, and IV is spiking? Maybe split it up over a few weeks. Not because something’s wrong. But because the short-term ride might get bumpier. If you’re holding a good stock, and it dips on no news—but IV was already elevated? That tells you the dip wasn’t random. It was expected. That can stop you from panic selling.

    And if you’re adding to a position you believe in, and both IV and VIX are low? That’s calm water. No guarantees. But you’re likely entering without turbulence.

    When to Watch, Not React

    Markets today are reacting to a lot of signals:

    • Middle East tensions
    • Currency fluctuations
    • Index reshuffles
    • Crude oil spikes
    • FII inflows and exits

    That’s a lot of noise. And VIX/IV don’t cut through it. But they do frame it. They let you ask: is this movement expected, or is something new happening? That question, more than any indicator, helps long-term investors stay patient.

    Tools That Show You the Picture—Not Just the Price

    If you’re using a mobile platform like Zebu, the data isn’t buried. You can check Nifty’s implied volatility. You can view VIX levels. And you can toggle option chains to see where the highest premiums are sitting.

    That kind of access isn’t about trading more. It’s about watching better. For example: if an option is trading with 18% IV but the stock has barely moved in three days, that’s a clue. There’s tension—just not visible. You don’t need to act. You just need to see.

    It’s Not About Prediction

    This bears repeating: VIX and IV don’t predict market direction. They show expectation. It’s like watching clouds form. Doesn’t mean it’ll rain. But you carry an umbrella anyway. Long-term investors aren’t expected to trade on volatility data. But understanding when the market expects volatility? That’s just good awareness. You avoid overconfidence. You avoid surprise. You hold your positions with more comfort.

    A Note on Extremes

    In 2020, during COVID’s early months, VIX hit 70+. That was pure panic. In 2021, when markets were flushed with liquidity, VIX stayed below 12 for months. Complacency crept in.

    Both extremes carry risk. The sweet spot? Somewhere in between. Enough movement to create opportunity. Not so much that fear clouds judgment. Today, with VIX around 13 and IV hovering near 15–16% on some key contracts, we’re in an odd zone: calm headlines, guarded behavior.

    That makes this a great time to observe, not assume.

    So, What Should You Do Today?

    If you’re a long-term investor, here’s a simple approach:

    • Look at your positions.
    • Check IV levels (they’re usually listed alongside options chains).
    • Take note of VIX (most market platforms display it in real-time).
    • Don’t trade. Just understand.

    You’re not changing your philosophy. You’re just layering in an extra bit of clarity. And in a market like this one—driven by headlines, flows, and technical structure—that clarity might be what keeps you from making decisions you’ll regret later.

    Disclaimer

    This blog is for informational purposes only. It does not constitute financial advice or trading recommendations. Zebu provides tools and data to support informed investing but does not guarantee returns or outcomes. Investors should consult a licensed advisor before making market decisions based on volatility indicators or any other technical data.

    FAQs

    1. What is the difference between IV and VIX?

      The VIX index measures overall market volatility expectations, while implied volatility (IV) shows expected price swings of individual stocks or options.

    2. Is volatility good for long-term investment?

      VIX volatility index spikes can feel scary, but for long-term investing strategies, volatility often creates opportunities to buy quality stocks at better prices.

    3. Is high VIX bullish or bearish?

      A high volatility index usually signals fear and potential market downturns, but it can also indicate attractive entry points for long-term investors.

    4. How does implied volatility affect stock prices?

      High IV often means higher option premiums and market uncertainty, influencing short-term price movements but not necessarily long-term value.

    5. How can investors track market volatility?

      Investors can follow VIX charts, monitor implied volatility, and use news and technical tools to gauge market sentiment and risk.

  • The Role of Economic and Political Factors in the Indian Stock Market: Insights for Investors

    As an investor in the Indian stock market, it is important to understand the various factors that can impact the performance of your investments. Economic and political factors can have a significant impact on the stock market and it is essential to be aware of these influences in order to make informed investment decisions.

    One of the most significant economic factors that can affect the Indian stock market is the state of the country’s economy. The stock market is closely tied to the overall health of the economy, as companies’ profits and stock prices are largely dependent on economic conditions. Factors such as GDP growth, unemployment rates, and inflation can all impact the stock market. For example, a strong economy with low unemployment and steady GDP growth may lead to an increase in stock prices, while a struggling economy may lead to a decline in stock prices.

    Political factors can also have a significant impact on the Indian stock market. Changes in government policies and regulations can affect the performance of specific industries and individual companies, which in turn can impact the overall market. For example, if the government enacts policies that are favorable to a particular industry, it may lead to an increase in stock prices for companies in that industry. On the other hand, if the government enacts policies that are unfavorable to a particular industry, it may lead to a decline in stock prices for companies in that industry.

    In addition to economic and political factors, other external influences such as global market trends and geopolitical events can also impact the Indian stock market. It is important for investors to be aware of these factors and to stay up-to-date on current events in order to make informed investment decisions.

    So, what can investors do to navigate these complex and constantly changing economic and political factors in the Indian stock market? Here are a few tips:

    Stay informed: As an investor, it is important to stay informed about current economic and political developments in India and their potential impact on the stock market. This can involve reading financial news, following economic indicators, and keeping track of government policies and regulations.

    Diversify your portfolio: By investing in a diverse range of assets, you can help mitigate the impact of economic and political events on your portfolio. This can include investing in different industries and sectors, as well as investing in both domestic and international markets.

    Have a long-term perspective: While it can be tempting to make impulsive investment decisions based on short-term market movements, it is important to maintain a long-term perspective. This can involve setting clear investment goals and sticking to a long-term investment plan, rather than reacting to every market fluctuation.

    Seek professional advice: If you are new to investing or unsure about how to navigate the Indian stock market, seeking the advice of a financial professional can be helpful. A financial advisor or investment professional can provide guidance on how to build a diversified portfolio that is aligned with your investment goals and risk tolerance.

    In conclusion, economic and political factors play a significant role in the performance of the Indian stock market. By staying informed, diversifying your portfolio, maintaining a long-term perspective, and seeking professional advice, you can make informed investment decisions and navigate these complex and constantly changing factors with confidence.

  • The Art Of Placing The Perfect Stoploss

    Stop loss is like a gauge that tells you how much you could lose on a trade. It’s important to set your stop loss ahead of time so you can be ready if a trade goes in a different direction. A stop-loss order is used to cut down on the loss if the price of a stock doesn’t move as expected and makes the traders lose money.

    A day trader sets her stop loss level before she makes her trade. When the cost hits the predetermined stop loss level, the trade ends automatically. The trader can keep the rest of the money she has put in. One can start making a plan for getting the lost money back. By putting in a stop-loss order, a losing trade doesn’t lose any more money.

    How does Stop Loss work?

    Let’s look at an example to see how a stop loss would show up on a trade. You must now decide where to put your stop loss. For example, if you want to buy a stock that is selling for 105 right now, you must decide where to put your stop loss. Keeping the stop loss below 100, at 99, is a great goal. This means you are willing to lose Rs 6 on this particular trade.

    You should also set your target at 1.5 times the percentage of the stop loss. In this case, the stop loss was set at Rs 6, which you were willing to lose. So, you should try to get at least 9 points, which would bring you to 105 + 9 = 114.

    Where should your stop loss be?

    Most new traders have a hard time figuring out where to put their stop loss settings. If the stop loss level is set too high and the stock moves against you, you could lose a lot of money. Instead, traders who put their stop loss level too close to the purchase price lose money because their trades are closed out too quickly.

    There are different ways to figure out how much each trade’s stop loss should be. From these strategies, you can figure out three ways to choose where to put your stop loss:

    How does Stop Loss work?

    Intraday traders often use the percentage method to figure out where their stop losses are. With the percentage approach, all a trader has to do is say what percentage of the stock price they are willing to lose before they close the position.

    Think about the case where you don’t mind if your stock loses 10% of its value before you sell it. And let’s say that one share of your stock is currently worth 50 cents. So, your stop loss would be Rs 60 x 10%, or Rs 6, less than what the stock is worth on the market right now.

    Determine Stop Loss Using the Method of Support

    Using the support method to figure out stop loss is a little harder for intraday traders than using the percentage method. But it is often used by intraday traders who know what they are doing. For this strategy to work, you need to know what your stock’s last support level was.

    Zones of support and resistance are places where the stock price often stops going up or down. Once you’ve found the support level, you only need to set your stop loss price point below that level. Let’s say you own stock that is now selling for Rs 500 per share, and the most recent support level you can find is Rs 490. It is recommended that you put your stop loss just under 490.

    Most of the time, the levels of support and resistance are not exact. Before quitting a trade, it’s smart to give your stock a chance to fall and then bounce back from the support level. Set the bar just a little bit below the support level to give your stock some room to move before you decide to close the deal.

    Using the Moving Averages Method to Figure Out the Stop Loss

    Compared to the support method, the moving average method makes it easier for intraday traders to decide where to put their stop loss. A moving average has to be put on the stock chart first. A longer-term moving average is better because it keeps you from putting your stop loss too close to the stock price and getting out of your trade too soon. Once you’ve put in the moving average, set your stop loss a little below it so it has more room to move in either direction.

  • The Pros and Cons Of Intraday Trading

    Intraday trading seems to be picking up steam in India with more traders opening demat accounts everyday. Even though it might seem like a lucrative career option, it comes with multiple issues as well. Here are the pros and cons of intraday trading.

    1. Quick Money

    Day trading, unlike long-term investments, can bring in money very quickly. The profit or loss will be displayed in your trading account right away, based on your exit plan and performance. You can choose whether to put the money in your bank account or put it back into your trading capital pool.

    2. No danger at night

    By not leaving your stocks on the market overnight, you can reduce the risk of overnight volatility when you day trade. Stock prices often change between when the market closes and when it opens, because of news and other things. This change could have an effect on the price of the stock.

    3. Make money in down markets

    One of the best things about day trading is that you can still make money even when the market is down. Instead of buying a stock, you can sell it short and then buy it back to make money. So, you can make money whether the market is going up or down. This benefit isn’t usually a part of investment opportunities.

    Dangers of day trading

    There are also some bad things about trading every day. If you want to be a successful trader, remember these problems so you can avoid them.
    Consistency is needed to deal with risk in markets that change a lot.
    The chance of losing money

    How to Start Trading Day Trading

    Before you can start trading on the stock market, you have to open a trading account and a DEMAT account. If you are an experienced trader who wants to try stock market intraday trading, you might open a new account to keep your trading separate. When you have different accounts, it’s easier to keep track of things. Due to the different ways that intraday trades are taxed, setting up a separate account makes tax calculations easier. Open a demat account with Zebu to benefit from a host of tools and benefits.

    After that, you can sign up for the tools you need for intraday trading. You can obtain various tools to help you with intraday trading after creating an account. Spend some time looking at daily charts before you start trading so you can become familiar with the patterns of price movement. There are many courses available that offer technical analysis education, and these could also be beneficial.

  • How to Avoid False Breakouts?

    How can we avoid false outbreaks?

    Since this is a problem that many traders face, it was also the reason we wrote this post. At first, trading breakouts may seem easy, but they quickly become hard to do in real time.

    This article gives you five important tips for trading breakout setups with more success and confidence.

    Let’s begin.

    Rule 1: Change the map and look for patterns.

    No trader knows for sure if a breakout will work or turn out to be a false break. As usual, the market decides what to do and what to say. We traders must listen and follow, NOT the other way around.

    Many traders make the mistake of studying and making predictions about the markets, only to blame the market when their predictions don’t come true. Trading doesn’t operate like this.

    The most likely path of least resistance, which acts as a road map for pricing, needs to be found over and over again. This is not a set path, and you have to keep improving it.

    Also, keep in mind that chart patterns come first, and breakout trade ideas come after that. Learn and recognise all chart patterns, or at least the most common ones.

    For example, if you know what a contracting triangle is and how it is expected to form five waves (ABCDE), you can figure out when to expect a real breakout.

    Rule 2: Wait for breakouts with strong candlesticks

    We can tell if a breakout is successful by looking at how strong the candle closes. When the candlestick closes close to the high or low, this is called a powerful candle closure.

    How a breakout setup and a candlestick closure work together is as follows:

    A strong bullish breakthrough is shown by a candle that closes close to the high.
    When a candle closes close to the bottom, this is a strong sign that the price is going down.
    The power can also be seen in the size of the candle. Compared to the other candles in that time frame, a big breakout candle is shown by a big candle, not a small one. Even though candle size is important, how close the candles are to each other is more important.

    Rule 3: The break of the break

    Traders love trading breakouts by focusing on a single time frame, watching for a drop, and then letting the trade develop. If you could see a pattern on a 4-hour chart, for instance, you would zoom in on a 1-hour chart and look for a smaller pattern to show up over that time. Why?

    Because when price makes a pattern after a big breakout, it shows that the breakout is real. It shows that the price is in fact making a new correction after gaining momentum. Price psychology in the market suggests that this is a sign of more of the same.

    If prices don’t form a pattern after the breakout, it’s likely that they will turn around and move quickly in the opposite direction. If that’s the case, the price is either making a false breakout or has hit a major support or resistance level and is now strongly going back up. In any case, it’s smart to stay outside.

    Rule 4: Candle Close and Body Above the Support and resistance

    Reviewing how market activity relates to the support or resistance (S&R) level is a good approach when employing moving averages and trend lines.

    When the candle body is above the MA or trend line (50% is respectable), the breakout is at its finest.

    By following these tips, you can avoid a significant amount of false breakouts. To open a demat account with Zebu and start trading breakouts today, please get in touch with us.

  • The Impact Of Inflation On The Forex Market

    The foreign exchange market, or forex, is a very volatile place. Volatility is what makes liquidity on the forex markets. As liquidity goes up, your chances of making money on your investments go up. But inflation is the main thing that is keeping the FX market from going up. This makes things hard for forex traders. Because of this, online currency trading also suffers.

    The rising rate of inflation around the world has caused a major Forex crisis that has messed up all previous financial calculations. The forex market is having a hard time right now because investors are getting scared and moving their money to safer places like fixed-income securities and gold.

    Inflation Across the Board

    When prices go up past a certain point, this is called inflation. This is what happens when a currency tends to lose value. Because of this, prices have gone up. When currencies lose value, the prices of goods slowly go up over time. The rise in commodity prices makes it harder for people to buy things. This is called the “depreciation of capital.” In this situation, online forex trading, which was once a priority for a forex investor, is now a liability. When people can’t buy as much, the market is more likely to get out of balance because the demand for foreign currency drops. When people’s ability to buy things goes down, inflation is more likely to start.

    This is true for both stock markets and FX markets. If you planned to open a demat account because you wanted to make money on the stock market and inflation is taken into account, the same no longer holds true. Some people think that the current situation in the world is just a sign of an upcoming recession. This is backed up by how investors act all over the world, not just in India. Most investors are told to put their money in “safe” things like gold and oil.

    Events around the world and money

    Not only is inflation making things worse, but there are wars happening all over the world, which makes it harder for global currency markets to recover. Investors are more worried than ever because of the conflict between Ukraine and Russia and, more recently, China’s recent military actions on Taiwanese soil that are seen as a provocation. So, fear of a recession caused by events around the world is a big reason why prices are going up. Recently, investors were looking forward to starting online currency trading as a result of the end of a global health crisis. However, more problems came up, and investors stopped trading again. Because everyone is worried about inflation, the expected boom in IPOs has also died down.

    How Inflation Affects Foreign Exchange

    Online forex trading has suffered a lot, just like many other types of business. Forex is an “over-the-counter” digital market where currencies are bought and sold. Since forex is traded in pairs, the value of each currency is judged in relation to the other currency in the pair. The value of a currency is based on how well the economy of the country whose currency it is is doing. When you buy a country’s currency, you are actually buying a piece of that country’s economy. If you think a currency has good prospects, you are more likely to buy it. You won’t invest in a country’s currency if it has inflation, which has happened in a lot of countries in the past few months.

    Various Investments

    Inflation can make it hard to do any kind of financial business, like trading currencies. Even if you can’t trade on Forex right now, you can still open a demat account with Zebu and invest in the stock market, which seems like a good idea.

  • Top Forex Trading Mistakes To Avoid

    India has recently become a popular destination to trade currencies online. More and more people want to profit from changes in currency prices, so they are getting into the currency market. If you want to start doing intraday trading in forex, this post is for you. Here are some of the most common mistakes that both beginners and experts make, along with suggestions for how to avoid them.

    1. Relying on leverage a lot

    There are two things to know about trading with leverage. You may be able to open a big position with a small amount of the transaction’s value. If the deal goes well, using a lot of leverage can help you win a lot more. But if the deal doesn’t go as planned, you could also lose a lot of money.

    To avoid making this mistake, you should always be careful about how much leverage you use. You should only use leverage if you can afford to lose it. In this way, you can protect yourself from large losses a lot.

    2. Ignoring technical indicators of trading

    The daily price changes on the currency market are affected by technical factors. Online forex trading is a sure way to lose money if you don’t know about or pay attention to technical trading indicators.

    To avoid this mistake, base your trades on technical indicators like MACD and candlestick patterns. This will help you predict how prices will move and make the right changes to your holdings.

    3. Trading for revenge

    Losses are a part of investing online that can’t be avoided. This is true even when it comes to the currency market. But when they lose money, a lot of traders give into revenge trading. Revenge trading is the act of trying to make up for losses by increasing trading capital.

    But this is not a good idea. If you give in to your feelings when trading, you will make bad decisions. To avoid this, you should always take a few days off after a loss to heal. In the meantime, think about and reevaluate your losing trade to figure out where you went wrong. Because of this activity, you will get better at trading.

    4. Taking positions before the news comes out

    This is a mistake that a lot of traders, especially new ones, tend to make. They make trades right before important news comes out so they can make money off of the volatility. Most of the time, though, that kind of move doesn’t work.

    During times of high volatility, when you trade forex online, the price changes may come as a surprise. Even if the news is good, the changes in the price of the currency pair might not be right.

    The best way to avoid making this mistake is to avoid trading before any news comes out. Wait until the news event is over and the market has calmed down before making any trades.

    Conclusion

    Before you start a forex transaction, you should always make a plan and stick to it. Put in place the right stop losses as well to lower risks. So, if you want to learn more about FX online trading, you should contact Zebu right away. For forex trading, you need a demat account and a trading account. Both of these can be opened online in just a few minutes.

  • When Should You Move To Debt Funds?

    In October 2021, the NIFTY reached its all-time high. The price of stocks was going up. Because of easy monetary policy, low interest rates, and FPI, the world stock market reached all-time highs. Some mutual funds, such as SBI Small Cap and Union Small Cap, had 100% returns.

    How should you invest when the market is very unstable and the NIFTY has dropped more than 25%? Do you have to put all of your money into debt funds?

    What are debt funds?
    Debt funds are types of mutual funds in which the money is invested in different debt securities. The debt funds also buy government and corporate bonds.

    Companies put out debt instruments in order to get money from the market. So, lending is the same as putting money into debt funds. The main reason to invest in debt funds is to get a steady stream of income. The issuers give returns based on a fixed interest rate that everyone agrees on. Because of this, debt instruments are sometimes called “fixed income securities.”

    When your portfolio is losing money is not the best time to invest in debt funds. Instead, the best time is when the stock market is hitting new highs. You can lock in your earnings by putting the money in safe, low-risk debt funds.

    When the interest rate is going up is yet another case. Since the interest rate goes up when the stock market goes down, and vice versa, this often happens when there is a lot of chaos in the stock market.

    It shows the way things are right now in the economy. The market is in a very bad place right now, and NIFTY has lost a lot of its value. In order to stop inflation from getting worse, governments are tightening their monetary policies. One way they are doing this is by raising bank interest rates. Because FD interest rates are going up right now, you might decide to put some of your money into debt funds.

    If you want to invest for the short term, you should invest in debt mutual funds to reduce risk. For short-term capital needs, you might want to think about liquid, ultra-short, low duration, and money market funds. These funds are given out over a six- to twelve-month period.

    Debt funds have low-risk returns and may be good for certain types of investors. There are many different ways to put money into debt mutual funds.

    Bond funds that are managed dynamically move money as interest rates change, which is what the name suggests.

    Income funds are safer than dynamic funds because the fund manager will invest in long-term funds.

    A very short-term fund’s life span is between one and three years. With a short-term investment goal, ultra short-term funds offer stable returns and a lot of cash.

    Conclusion
    If you were thinking of sending money to a debt fund, you should think again! You should buy more stocks when the market is unstable and going down. Debt mutual funds may make your portfolio less risky, but they also make it less likely that it will make money. Debt funds, or FDs, are good investments for short-term investments or for people who are retired and depend on income from investments.

  • Which Is Riskier: Trading Futures Or Trading Options?

    Futures vs options trading always seem to be up for discussion. Traders talk and talk about whether futures or options are riskier. In any case, it’s important to think about how much risk you can handle before you take a side in the ongoing debate. Also, once you know exactly what futures and options are, it will be clear which one has more risks than the other.

    Trading is a risky business, that’s why you should try with new-age technology. We at Zebu, a share trading company offer our customers the best online trading platform to help with their online stock trading journey.

    A Brief Explanation of Options

    A contract between a buyer and a seller is an option. It gives the owner the right, but not the obligation, to buy or sell an asset at an agreed-upon price within a certain time frame. Options are contracts that are parts of a larger group of financial instruments called derivatives. They can be used on indices, stocks, and exchange-traded funds (ETFs).

    On the stock market today, options get their value from the underlying securities, such as stocks. When you trade stocks, all you are doing is trading ownership in a publicly traded company. Options contracts, on the other hand, let you trade the right or obligation to buy or sell any underlying stock. If you own an option, you do not automatically own the thing that the option is based on. Also, it doesn’t give you any rights to dividends.

    Futures: A Short Explanation

    Futures are also contracts or agreements to buy or sell certain stocks or commodities at a certain time in the future. In a futures contract, the buyer and seller agree ahead of time on prices, quantities, and the dates of future deliveries.

    You can either buy or sell in a futures contract. If the price goes up, buyers make money because they bought the asset when it was cheaper. If the prices go down, the people who sold at higher prices will make money.

    A Quick Look at Futures, Options, and Risks

    If you do online trading, you may know some things about how the markets work. For example, if you trade and invest in stocks, you know that you need to open a demat account. In the same way, you would know that futures and options are derivatives if you knew anything about them. They also use leverage, which makes them riskier than trading stocks. Futures and options both get their value from the asset that they are based on. Futures and options contracts make money or lose money based on how the price of the asset they are based on changes.

    There is enough risk in the share market today. Your risk tolerance may be a factor in deciding between futures and options, but it’s a given that futures are riskier than options. Even small changes in the price of an underlying asset can affect trading. This is especially true when trading options. Even though both have the same amount of leverage and capital at risk, futures are riskier because they are more likely to change. You need to know that leverage is like a “two-edged sword.” You can make money quickly and lose it just as fast. In terms of futures, you can make money quickly or lose it in an instant. This is not the case with options trading.

    With options, you can buy either “put” or “call” options while you are trading online. The most you can lose is the amount of money you have put into the options. If your prediction is way off and your options are worthless by the time your contract is up, you may have some bad luck, but you will only lose the premium you pay for the options.

    With futures contracts, on the other hand, you have unlimited liability. You will have to make a margin call to add more money to your account to make up for the daily losses. If you lose money every day, you may have to keep going until the underlying asset stops going against the wind. If you put most of your money into futures contracts and don’t have enough money to cover your margin calls, you could even go into debt. Does all of this sound too risky? You don’t have to worry. Technically, futures are not inherently riskier. Instead, it is the fact that futures can use a higher level of leverage that makes both profits and risks bigger. You can easily borrow money to buy stocks and get 5:1 leverage. With futures, you could get 25:1, 50:1, or even more. So, even the smallest moves can lead to huge profits or huge losses, depending on what was invested.

    Things to think about

    If traders had to choose between trading futures and trading options in the world of online trading, options would be the more interesting choice. In options, the most you can lose is what you put in the first place. Options trading might be the better choice, especially if you use the spread strategies that options give you. If you plan to hold on to trades for a long time, bull call spreads and bear put spreads can increase your chances of success. Futures are riskier because they use a higher level of leverage and a smaller amount of cash to control assets with a higher value. This means that the amount you can lose may be higher than the amount you put in at first. Also, some things about the market could make it hard or even impossible to sell or hedge a certain position.

    Try our new-age technology now! We at Zubu, a share trading company offer our customers the best online trading platform to help with their online stock trading journey.

  • Ideal Timeframe For Intraday Trading

    Intraday trading often proves that taking fewer trades gives you better profits. Instead of buying and selling stocks the whole trading day, it might be smart to do intraday trading only during a few key hours. In fact, traders who work with stocks, index futures, and ETFs have found that it’s better to spend one to two carefully chosen hours a day on trading.

    The ideal time-frame for intraday trading

    Long-term intraday traders will do well to find the best time frame. Using these hours can help you get the most done because they are when important things happen on the market. On the other hand, people who trade all day have little time for other things and don’t make enough money. Even intraday traders who have been doing it for a long time can lose money if they trade outside of the best time frame for intraday trading. This raises the question: what is the best time frame for intraday trading? Most say that it is between 9:30 and 10:30 in the morning.

    Should you buy or sell within the first 15 minutes?

    Intraday trading is best done in the first one to two hours that the stock market is open. But in India, most stock market trading channels don’t open until 9:15 a.m. Why not start at 9:15 instead? If you have been trading for a long time, trading in the first 15 minutes might not be as risky. For people who are just starting out, it’s best to wait until 9:30. This is because, in the first few minutes after the market opens, stocks are probably reacting to the news from the night before.

    A trade will often show sharp price movements in one direction. This is nicknamed the “dumb money phenomenon” because people rely on old news. Traders with a lot of experience may make some good deals in the first 15 minutes. They are mostly mean reversal traders. Beginners who have never heard of “dumb money” or the strategy that experienced traders use to fight against it will think the market is very volatile. So, it’s better to wait until 9:30 than to jump in at 9:15.

    Trading at the open

    Not all moves are bad. After these first extreme trades, the market will have the right amount of volatility for beginners. Since this is the case, the best time to trade is between 9:30 am and 10:30 am. There are many benefits to intraday trading in the first few hours after the market opens:

    The first hour of the day is usually the most volatile, giving you plenty of chances to make the best trades of the day. The market is liquid enough to get in and out of during the first hour. Since there is more volume, liquid stocks are likely to be sold off faster.
    – It has been shown that the stocks bought or sold in the first hour make some of the biggest moves of the whole trading day. If you do it right, it can give you the best returns of any time during the trading day. But you should also prepare for large losses in the first hour due to volatility.
    – After 11 a.m., trades usually take longer and involve fewer people, which is bad for intraday traders who need to finish their deals by 3:30 p.m. If you need more time, it would be a good idea to keep this session going until 11 a.m. But day trading is a better fit for the strategy of only trading in the first hour.

    Think about the bigger picture.
    The range of 9:30 to 10:30 is not a rule that every trader must follow. It’s good for beginners in general, but you can change it to fit your needs. It’s smart to think about the bigger picture.

    For example, one strategy for intraday trading is to keep the day of the week in mind along with the best time frame. Monday afternoon is often a good time to buy on the market because prices tend to go down at the beginning of the trading week. Experts say that you should sell on Fridays, right before the drop on Monday.

    Also, not every trader needs to do something during that first hour. People who usually make more than one trade in a day can choose a shorter time frame. Intraday traders who only make a few trades each day can choose a longer time frame instead. Traders with a lot of experience may also change their time frame on different days, depending on how busy they are.