Zebu blog

Tag: trading strategies

  • How Does Short Selling Work In The Indian Share Market?

    When an investor sells shares he does not own, this is called “short selling.” In a short sale, a trader borrows shares from the owner with the help of a brokerage. The trader then sells the shares at market value, hoping that prices will go down. The person who sells short buys the shares at a loss and makes money when the prices go down. It’s important to know that short selling is done by experienced traders and investors who think that the price of shares will go down before they are returned to the owner. Short selling has a high risk-to-reward ratio because you could make or lose a lot of money.

    Information about short sales:

    1. In a short sale, the seller does not own the stock that is being sold. They are borrowed from someone else.

    2. Both individual investors and large groups of investors can do short sales.

    3. Short selling is based on guessing what will happen.

    4. The seller bets that the price will go down by using short selling. If prices go up, the seller will lose money.

    5. Traders have to do what they have to do and give the shares back to the owner when the trade is settled.

    6. It’s important for investors to know that the deal is a short sale.

    7. Most of the time, short selling happens when the market is down and the price drop is big.

    On the stock market, a short sale is done when people want to make money quickly. Some people say it’s like holding on to stocks for a long time. Long-term investors buy stocks with the hope that their prices will go up in the future. Short-sellers, on the other hand, watch the market and profit when prices go down.

    How does the short sale process work?

    Pros of short-selling:

    Financial experts have had a lot to say about the benefits of short selling. Even though this approach has been criticised, market watchdogs all over the world support it because it helps fix irrational overpricing of any stock, provides liquidity, stops bad stocks from rising quickly, and makes sure promoters can’t change prices.

    Short-selling disadvantages

    Short-selling is an illegal practice that market manipulators often use to raise stock prices artificially. Because of this, there is a higher chance of market instability and more volatility. The planned drop in stock prices could hurt the company’s confidence and make it harder for them to raise money.

    A “naked short sell” when a trader sells shares without borrowing them or making plans to borrow them. If the trader doesn’t borrow the shares before the clearing time, he or she can’t give them to the buyer. The trade is said to have “failed to deliver” if the trader doesn’t close the position or borrow the stock. Since it goes against the laws of supply and demand, naked short selling is illegal in most countries. If a large number of naked short sales are made, the market can become unstable.

    Short selling is not a good idea for new traders and gamblers who don’t understand the risks. Short selling should only be done by people who know a lot about how the market works.

  • What Is All The Hype About A Trading Edge?

    What Is All The Hype About A Trading Edge?

    In theory, a trading edge is a strategy, observation, or special technique that gives a trader an edge over other traders in the market and helps them make more money. There are a lot of books and papers on different trading techniques, but since many people learn and use the same information, the chances that it will give a trader an edge quickly go down to almost nothing.

    Finding an edge and understanding what that really means can help you decide if it’s worth your time to look for one or if it’s even possible or useful.

    The Common Thought

    Most people think that an edge is something that a trader knows or uses that gives them an advantage over the market or all the other traders. For example, a trader might think that using a certain indicator (like the Relative Strength Index, or RSI), in a certain way (like making short trades when the RSI is above 84), gives them an advantage over traders who don’t use the same indicator in the same way.

    Many new traders spend years trying out different indicators or different settings for indicators (like a length of 10, then a length of 15, etc.). They also try out different chart settings, like time-based charts, tick-based charts, or volume-based charts, to find the combination that gives them an edge.

    Getting Your Way

    Some traders have never heard of the term “edge.” When they do, they might start to wonder if they have an edge or if they need to find one. A few rules can help traders find trading edges, if there are any:

    The edge must be based in reality and can’t be based on assumptions. A trader needs to know that an edge might not work all the time. It is possible to make a lot of money with an edge, but then the edge might stop working for a while.

    If you think you have an edge, you should test it by clearly defining the rules and then applying them to historical market data and “paper trading.”

    A wake-up call

    In reality, there are traders who think they have an advantage and traders who think they need an advantage. Some traders laugh every time someone talks about an edge while they make another trade that makes them money. In other words, you might find and use an advantage or you might not.

    Many traders think that good training and instruction give them an edge. In fact, this could be the edge that people looking for an edge are looking for. To trade well, you don’t have to compete with the market or other traders. In fact, the opposite is true. Good risk management and a healthy dose of patience are more likely to lead to success in trading. Retail traders often do better when they focus on controlling their own decision-making processes instead of making decisions based on things they can’t change.

    This is not what many new traders will say. If you are one of them, think about this: Traders who think they have an edge will never tell other traders what trade they are about to make. These traders think that if they talk about it, they might lose their edge.

    Professional traders, on the other hand, won’t think twice about telling other traders what trade they are about to make. This is because it doesn’t change the potential of the trade if other traders know about it or make the same trade.

    Prices can change over time based on supply, demand, and investor sentiment as a whole, but just because one investor thinks they have an edge won’t change anything.

    If you are a new trader who is just starting to look for your edge or if you are an experienced trader who has been looking for your edge for years, you should stop. Markets change so quickly that an edge you find today is likely to be useless tomorrow. In the short term, looking for a trading edge might help you make quick money, but it’s more likely to waste your time and cause you to miss out on opportunities and money.

  • 5 Skills That Every Trader Should Have

    There are many ways to become a professional trader, and a person needs a lot of skills to do well in a field with a lot of stress and competition. When financial firms hire people for trading jobs, they usually look for people with degrees in math, engineering, and hard sciences instead of just people with backgrounds in finance.

    There are also different kinds of trading jobs, some of which require communication skills with customers as well as knowledge of charts. So, let’s take a look at some of the skills that all traders need.

    Skill at analysing

    Every trader needs to be able to look at data quickly and figure out what it means. Trading involves a lot of math, but charts with indicators and patterns from technical analysis show what the data means. So, traders need to improve their analytical skills so they can see trends in the charts.

    Research

    Traders need to have a healthy thirst for information and a desire to find all the important data that affects the securities they trade. Many traders make schedules of economic reports and news that affects the financial markets in a way that can be measured. By keeping up with these sources of information, traders can act on new information while the market is still processing it.

    Focus

    Focus is a skill, and the more traders use it, the better they get at it. Because there is so much financial information out there, traders need to be able to focus on the important, actionable information that will affect their trades.

    Sector-based traders also focus on one particular industry. This helps them learn more about a certain sector, industry, or currency, which gives them an edge over traders who don’t specialise as much.

    Control

    Control and, more specifically, self-control go hand in hand with being able to focus. A trader needs to be able to keep their feelings in check and stick to a plan and strategy for trading. This is especially important when using stop losses or profits at set points to manage risk.

    Many trading strategies are made so that the trader loses less when things go wrong and makes more money when things go right. Strategy goes out the window when traders start to get emotional about their trades, whether they are good or bad.

    Keeping a record

    Keeping good records is one of the most important parts of trading. If a trader keeps careful records of how his or her trades turn out, all that’s left to do to get better is to try out different strategies and change them until one works. If you don’t keep good records, it’s hard to show real progress.

  • What is Algo Trading and How Does It Work?

    Algorithms are everywhere. From our smartphones to laptops to anything with technology, algorithms power the functionality of billions of entities. With the rise of more advanced technologies, this piece of logical code is now used in almost every field. Algorithms use user data, patterns from the past, and a set of instructions that have already been decided on to reach their goals. Mutual Fund companies, for example, use an algorithm to take the set amount out of your bank account every month for a SIP

    Algorithms are used in the virtual transaction system to make sure that trading is clear, that users have a good experience, and that there aren’t any hiccups or delays. But depositories and stockbrokers aren’t the only ones who use algorithms. Traders use algorithms to avoid mistakes made by retail traders and increase their chances of making money. Algorithmic Trading or Algo Trading is the name for this process.

    Before we get into what is Algo trading it is important that you understand that it requires a powerful tool. As a share broker company, we understand the requirements of an avid trader and offer a seamless . online trading platform with the lowest brokerage options.

    How does algorithmic trading work?

    Algorithmic trading is a way to trade quickly on the financial market by using trading instructions that have already been programmed. Traders and investors use trading software, which they tell what to do based on time, volume, and price. When the market triggers the set instructions, the investor’s orders are carried out by the trading software. In general, Mutual Funds, Hedge Funds, Insurance Companies, Banks, etc. use algorithmic trading to make a large number of high-volume trades that would be impossible for humans to do.

    Algorithmic trading lets investors make more deals in less time without human emotions and mistakes.

    Take a look at the following example to better understand what algo trading is.

    The following set of instructions can be given by an investor for algorithmic trading to take place:

    Instruction 1: Buy 200 shares of XYZ company if the price goes above its 15 minute high.
    Now, if the price of a share goes above the 15 minute high, the algorithmic trading system will automatically place an order for 200 shares of XYZ company. But the algorithmic trading software won’t do anything with the order unless the conditions are met.

    Instruction 2: Sell 200 shares of XYZ company if its 20-day moving average falls below the 200-day moving average on the 5-minute time frame.
    In this case, the algorithmic trading software will sell 200 shares of XYZ company if its 20-day moving average falls below its 200-day moving average.. If it doesn’t, the order will not be executed.

    For algorithmic trading to work, each set of instructions must be carried out only once. For example, in Instruction 1, the algorithmic trading software will place a buy order if the price stays above the 15-minute high for even a few seconds. After those few seconds, the price might drop back below the entry point and develop a loss. But the order would have already been placed as soon as the conditions are met.

    Algo trading has come a long way in India and is all set to reach greater heights. You can simplify your trading system or add as many data points to it as you want but it is crucial to understand its working and monitor it closely.

    As we mentioned earlier Algo trading requires a powerful tool. As a share broker company, we understand the requirements of an avid trader and offer a seamless online trading platform with the lowest brokerage options.

  • The Basic Rules Of Day Trading You Should Know

    Day trading is a way to trade stocks that is both risky and profitable. Day trading, which is also called intraday trading, is when you buy and sell stocks during the same trading session. Here are some basic intraday trading tips you can use if you want to use this strategy to make money on the stock market.

    Before we get into the rules, the basic rule of trading is to use the right tools — as a share trading company we understand this better than anyone and are here to offer our customers the best Indian trading platform along with the lowest brokerage options.

    1. Choose the best stocks

    When you start day trading, the first and most important thing you should do is choose the right stock to buy. Not all stocks are good choices for trading during the day. Since you would be buying and selling them during the same trading session, you would need to choose stocks with a lot of liquidity, which will make buying and selling them easier. Large-cap stocks and mid-cap stocks are usually the best choices for day trading because they have a lot of buyers and sellers.

    2. Set prices to enter and exit the market

    Once you’ve decided on the stock you want to trade, the next step is to set entry and exit prices. Going into a trade without any goals is a sure way to lose money. Set a price at which you want to buy the stock and stick to it, even if it means you might not be able to buy it. Set a goal for when you want to sell the stock, even if it means you might miss out on any gains the stock might make in the future.

    3. Don’t forget to set stop loss
    After buying the stock, the first thing you should do is set a stop loss. This will keep you from losing a lot of money if the stock moves in a way you didn’t expect. Let’s say you buy a stock for Rs. 100 with the hope that it will go up. But as a safety net, you set a stop loss at Rs. 97. Now, if the stock goes against your expectations and drops to Rs. 97, the stop loss will be triggered, and your stock will be sold at a loss of Rs. 3. You will also be protected if the price goes down even more.

    4. Always follow the trend

    This is one of the best tips you can use when trading during the day. If the market is going up, it’s a good idea to buy stocks. And if it is bad, it is best to sell stocks. Contrarian views on the market are never a good idea because they can backfire. For example, many people short-sell stocks when the market is bullish because they expect the price to go down. These kinds of changes don’t happen very often.

    Conclusion

    Even though intraday trading is riskier than regular trading, when done right, it can be one of the most profitable ways to make money consistently. So, if you want to do day trading, you must have both a trading account and a Demat account. Get in touch with us right away to start trading stocks.

    As a share trading company, we understand this better than anyone and are here to offer our customers the best Indian trading platform along with the lowest brokerage options. Want to try out our tools? Get in touch with us.

  • Things To Keep In Mind During A Market Correction

    Some investors are wary of the stock market and investing in stocks in general because these markets tend to be unstable. Investors say they’d rather be safe than sorry, so they put their hard-earned money into relatively safe investments like government-issued bonds and fixed deposits. People who say the stock market is extremely volatile aren’t completely wrong, because it can be. But it’s important to remember that investors and traders who know what they’re doing can get a good idea of how volatile the market is and limit any possible loss.

    While you analyse how the market is going to act, it is important you have the best tools in hand. At Zebu, we aim to offer our users the best trading accounts and the lowest brokerage for intraday trading to make their online stock trading journey easy.

    Correction in the stock market

    If you are a big investor and most of your money is in stocks or if you want to start trading and investing in the stock market, you need to know about stock market corrections. A “correction” in the stock market is when prices fall by at least 10% from their previous highs. Just the fact that prices are falling gives it a bad reputation. Even though this might make you feel nervous, it doesn’t always mean something bad. Most investors think that this is a normal part of trading on the stock market. In light of this, there are a few things you should know about corrections in the stock market.

    1. Types of corrections

    The markets can only go up or down. But when the market goes down, it can go down in different ways. For example, a “pullback” is a change of about 5% in market prices. A correction, on the other hand, is a little bit bigger, with a drop of 10–20% from previous highs. Then you have what is called a “bear market,” which means that prices have dropped more than 20% from their previous highs. This could go on for a longer time than a pullback or a correction. When you buy shares online, the good news is that bear markets don’t last as long as bull markets.

    2. Inevitable Corrections

    Corrections are the only way to reach a balance that makes sense for markets to stay in a healthy state. If markets go through the roof, it means that other parts of a country’s finances, like inflation, are in trouble. Because of corrections, investors can buy stocks at fair prices.

    3. Greater uncertainty

    During a correction, volatility, as measured by the VIX (volatility index), is thought to reach greater heights. This is because investors’ feelings change all the time, and a wide range of feelings affects market prices.

    4. Expectations

    Corrections in the stock market can’t be predicted, but they happen as often as the sun rises and sets. Also, a crash in the stock market doesn’t have a clear cause. Some stock market investors make predictions based on what happened in the past, but this isn’t a sure thing.

    5. A chance to make a long-term investment

    Long-term investors like it when the stock market drops because they can buy stocks at lower prices (called “discounts”) and they don’t mind keeping them for a long time. When the stock market as a whole falls, the prices of individual shares tend to fall as well. This is great for people who invest for the long term.

    6. Temporary

    Corrections are temporary. Most people agree that they may only last a little more than a year at the most. This is important to investors because months of hard work can go to waste in a single day, but if you look at the big picture, the highs of the stock market are higher than the lows of corrections.

    7. Dividends

    When you buy shares online, you should know that in the past, growth stocks have helped the stock market as a whole reach new heights. But stocks that pay out income or dividends can be a safer investment. These come from stable companies and give you dividends you can count on. They start making money after a few years. If you buy “dividend stocks,” you might still get returns that won’t change if the market goes down.

    No Reason to Worry

    A few changes here and there don’t matter much in the long run. In general, the market is always going up.

    Stock Market Trading and Investment
    You shouldn’t worry about a correction when you open a Demat account. Many investors do this, and it keeps them from having a healthy view of investing and diversifying their portfolios. You can learn and make money at Zebu, and we can help you make smart investments.

    At Zebu, we aim to offer our users the best trading accounts and the lowest brokerage for intraday trading to make their online stock trading journey easy. Check our website for more info

  • 5 Things To Keep In Mind Before Trading In Futures and Options

    Those who want to become derivative traders have a lot to gain from trading options and futures. Most of the time, people jump into FnO trading without knowing how it is different from trading on the spot market. If you’ve been thinking about trading futures and options, here are 5 things you need to know before entering the derivative markets.

    The best way to keep a track on your losses is to have the right tools in place and as one of the experienced brokerage firmsin India we have the best trading accounts for our users and offer lowest brokerage fees.

    1. Your losses aren’t limited to the money you put up as a margin
    When you trade on the spot market, the most you can lose is the amount of money you put in. In futures trading and options trading, on the other hand, you pay margins that are a lot smaller than the amount of capital you are putting at risk. This makes it easier to lose track of how big your possible loss really is. Before you start FnO trading, it’s helpful to remember this.

    2. Liquidity is easy to forget about

    When they first start trading options and futures, many traders don’t realise how important liquidity is. So, be careful not to make the same mistake. Even though it’s important to have a good options trading strategy or futures trading strategy, it’s just as important to make sure that the derivatives you’re trading in are liquid enough to support an exit.

    3. Moneyness of options

    This is something you really need to know before you start trading options. Out-of-the-money (OTM) options may be cheaper, but they often aren’t liquid enough, which is a big problem. So, the best chance isn’t always the one that costs the least. Make sure you find a good balance between affordability, profit, and cash flow.

    4. You can use FnO trading to hedge

    There are risks that come with trading in FnO. Beginners should always use a futures trading strategy or an options trading strategy along with a regular trade so that the FnO trade can protect the regular trade. This way, you can lessen the risk and learn more about how the derivative market works at the same time.

    5. Trading plans are important

    In derivatives trading, FnO trading strategies are very important. Different plans work best in different situations. For example, you can use covered calls if you’re worried about how much it will cost to keep a call on hold. On the other hand, if you want to make more money if the price goes down, you can use protective puts. Also, keep in mind that complicated and multi-layered plans are usually more expensive.

    So, before you start trading FnO, make sure you remember these things. For beginners, it’s helpful to have a reliable tool or platform to use, especially when it comes to making and analysing strategies. Here, our advanced options trading platform, Zebull, can come in handy. If you want to get into the derivatives market, you should check it out and use the helpful features.

    Don’t lose out on a chance to have the right tools in place, as one of the experienced brokerage firms in India we have the best trading accounts for our users and offer lowest brokerage fees.

  • Who Are The Market Participants Of The Futures Market?

    A market is strong not only if there are products to trade and a way to keep things in check, but also if the people who take part in it are good. The same is true of the futures market for commodities. Even though there are thousands of traders who buy and sell precious metals, industrial metals, and agricultural goods, these traders and market participants can be put into four main groups. This sorting is very important because each of these types of market participants leaves its own mark on the market and adds to its strength in its own way.

    Are you looking for the best trading platform? Then your search ends here with years of experience as a share broker, our team at Zebu has come up with the
    best stock trading platform     for our users.

    1. Speculators on the commodity market

    The time that speculators are on the market is very short. They might want to get out of their long or short position the same day or in a few days. They make money by understanding global economic cues and determining which commodity will go up or come down. In the equity derivatives market, speculators are also often called intraday traders. Most speculators don’t care which way the market is going and are willing to trade both ways, that is, on the long side and the short side. Speculators usually try to be on the right side of the market’s overall momentum and the momentum of the commodity they are trading. Since speculators depend a lot on small trading opportunities in the commodity markets, they use technical charts, supports, resistances, break-outs, patterns, etc. to help them make their trades. Speculators play a very important role in the commodity markets because they keep the markets liquid and make sure that the bid-ask spread is as small as possible.

    2. Margin traders who trade in the direction of the market

    When it comes to certain commodities, these traders have a slightly longer-term view than speculators, who usually work at the short end of the market. Since margin trading is possible in the futures market, traders use futures as a stand-in for buying the commodity on the spot market. Instead of locking up all of their money in a spot position, traders who pay a margin use futures as a stand-in for spot positions. Margin traders are not only willing to wait until the contract ends, but they are also willing to take a longer-term contract and pay the rollover cost to keep the position open. Margin traders usually don’t put too much stock in technicals, but they have a strong fundamental premise that makes them willing to pay the roll cost to keep the position open for longer. Most of the time, the trades of these margin traders give traders and analysts hints about which commodities are getting long-term interest and are a leading indicator of changes below the surface.

    3. Spot / Futures Arbitrage Traders

    Arbitrage traders do something very different in the commodity markets. By trying to lock in spreads, they actually try to make the prices on the market fairer. Before we can figure out how arbitrageurs work in the commodity markets, we need to know how they do business in the stock markets. If JSW Steel is quoted at Rs.500 in the spot market and Rs.510 in the stock futures market, the arbitrageur will buy JSW Steel at Rs.500 in the spot market and sell JSW Steel Futures at Rs.510. So, he can be sure of making a profit of Rs. 10 till the price gap is bridged. On the day of expiration, both the spot position and the futures position will end at the same price, giving the arbitrageur the chance to make the 2% spread. The markets for commodities can be a bit more complicated. First of all, different agencies control the spot market and the futures market for commodities, which makes things more complicated. Second, unlike stocks, commodities have extra costs like shipping fees, insurance costs, storage fees, stamp duty, etc., which all need to be taken into account when figuring out the spread. But when all of these costs are taken into account, if the arbitrage spread on any commodity is positive, the arbitrageur will buy in the spot market and sell in the futures market. By fixing any problems with prices, the arbitrageur will not only be sure to make a profit, but he or she will also make the market work better. Arbitrage takes a lot more time and money than speculation or trading on margin.

    4. Hedgers

    Hedgers are people who have an underlying exposure to a certain commodity. Let’s say you have a big order of silver that you need to give to a jeweller in 3 months. The only problem is that the deal will be made at the price that was in effect on that date. This puts you at risk for price changes over the next three months. You’re happy with the price of silver right now, but you’re worried that it might go down in 3 months. You can protect yourself by selling short 3-month silver futures. By doing this, you’re securing your position at a price that seems good to you at first. So, you don’t care what happens to the price of silver over the next three months. If the price of silver goes up, you will lose money, but that is what a speculator does. As a hedger, it is your job to protect yourself from losing money, which you have done well. Hedgers are traders who have real exposure to the underlying market. Because of this, they make the commodity markets more stable and trustworthy.

    These are the four main participants of the commodity markets. The direction and health of the commodity markets are determined by what these four people do together.

    Your search for the best trading platform? With years of experience as a share broker, our team at Zebu has come up with the best stock trading platform for our users.

  • Benefits Of Trading In Index Futures


    Title Page Separator Site title

    A futures contract on a sectoral or market-wide index is called an index future. On the NSE, for example, you can buy futures on the Nifty, which is a market-wide index, and liquid futures on the Bank Nifty (which is a sectoral index of liquid banks). Both of these indices are very liquid, and both individual and institutional investors trade them a lot. Why have index futures in India become so popular? Why would you want to trade in index futures? Index futures trading in India grew out of stock futures trading, which was similar to the old Badla system on the BSE. In addition to looking at how to trade index futures, let’s look at how traders can actually benefit from doing so.

    As one of the top brokers in the share market we understand the concerns with brokerage fees and offer lowest brokerage for intraday trading and the best trading accounts for our users.

    1. You can look at the whole and avoid stock risk

    Let’s say you’ve decided to buy banking stocks, but it will be hard to figure out which ones to buy. While NPAs may be a problem for PSU banks, valuations are a problem for private banks. A better idea would be to look at the whole banking industry, which will give you a natural way to diversify. You can do this by buying Bank Nifty Futures and taking part in the rise of banks. The benefit is that you can keep your position open as long as you want by rolling it over each month for a small fee of about 0.50 percent.

    2. You can trade in both long and short directions

    It’s fine if you’re betting that banking stocks will do well. But what if you think banks are bad? If you own banking stocks, you can sell them or sell them short on equity markets. But because Indian markets use rolling settlements, you can only short stocks for one day. The other option is to sell stock futures of certain banks, but this also comes with risks related to those banks. All of these problems can be solved by selling the index futures for Bank Nifty. If you think the Indian markets as a whole will go down, you can just sell Nifty futures.

    3. The margins for trading index futures are lower

    Always keep in mind that trading in futures is all about trading on margins. But the margins on indices like the Nifty and the Bank Nifty tend to be lower than the margins on individual stocks. Because an index is a group of stocks, it offers a natural way to spread out risk. This is shown by the fact that less risk is needed to take a position in index futures. This will make sure that the amount of money that is locked in is also less.

    4. With index futures, you can reduce your risk

    This is a very important part of how you manage your portfolio. Whether you invest on your own or through a company, you may have a large portfolio of stocks. Once the US Fed raises rates, you think the market will fall. At the same time, you are sure that the drop in your stock prices will not last long and that they will go back up in the next few months. You could just keep your portfolio, but it would be better to sell Nifty futures to spread out your risk. When the market goes down, you make money on Nifty futures, and these profits will help you lower your average cost of holding equity. After 3 months, you will definitely be better off.

    5. Very liquid
    There are often problems with the way certain stocks or stock futures trade. On the other hand, index futures rarely face liquidity risk because institutional investors like to use them. Because of this, the bid-ask spreads are also very small. This makes it pretty safe to trade in these index futures, since you won’t get stuck for lack of liquidity. This is one of the main reasons why trading index futures is good.

    6. Index futures can help you diversify

    If you have a portfolio that is mostly geared toward financial stocks and you think there is some risk because RBI is raising interest rates, so you want to add safety by investing in non-cyclical sectors like FMCG and IT. Buying these stocks is one option, but it will cost money and lock up funds if the opportunity is only for a short time. A better way is to add index futures for the FMCG index and the IT index to your portfolio. This will help you diversify your portfolio’s structure with little risk and money.

    7. It costs much less to trade index futures.

    Index futures have much lower commission rates and STT rates than equities or even stock futures. In fact, most brokers will also offer you fixed brokerage packages on indices, which makes them cheaper than stock futures as well. Make the most of the fact that index futures cost less. This is why index futures are a great way to trade with less risk and a higher chance of making money.

    As we mentioned earlier as one of the top brokers in the share market we understand the concerns with brokerage fees and offer lowest brokerage for intraday trading and the best trading accounts for our users.

  • The Features Of Futures Market

    Here are some of the most interesting things about futures contracts:

    Let’s start off by saying that the Indian derivative market is the largest in the world in terms of turnover and market participation!

    Before we get on to understanding more about the Futures market, we wanted to inform you that as an online trading company we offer lowest brokerage for intraday trading for our customers
    A futures contract can be used for exchanges, commodities, currencies, and indices. It can also be used for many different types of asset classes.

    A futures contract is not flexible like a forward contract. For example, if a contract says it applies to 1000 barrels of oil, the price must be locked in per barrel or in multiples of 1000 barrels. To lock in a price, someone would have to sell or buy a hundred different contracts. To lock in the price of a million barrels of oil, you would have to buy or sell a thousand of these contracts. Traders also get a good idea of what the futures price of a stock or the value of its index is likely to be.

    Future contracts are mostly used to figure out how many shares will be bought and sold in the future based on their current future price.

    Futures are traded on margin, which means that people who don’t have enough money can still trade and take part. To do this, one can pay a smaller margin instead of the full value of the physical holdings.

    There are two types of people who use future contracts: speculators and hedgers. Producers or hedgers are the people who make or buy an underlying asset hedge. The price at which the good will be bought or sold is also guaranteed by these people. On the other hand, speculators are people who use futures to bet on how the price of the underlying asset will change.

    Futures Contract Example

    Here’s an example of a futures contract to help you get a better idea of what it is:

    Let’s say that a person who makes oil wants to sell it but worries that oil prices will go down in the future. A futures contract can be used to make sure that the oil producer gets a set price and doesn’t lose money. With the help of future contracts, the oil producer can lock in the price at which the oil will sell, and once the future contract is up, the oil will be sent to the buyer.

    On the other hand, a company that makes things might need oil to make widgets. Since this company plans ahead and likes to get oil every month, they may also use a future contract. So, based on the price set in their future contract, the company knows how much oil they will get. They know that once their contract is up, they will have to take delivery of that oil.

    Conclusion
    Futures contracts are a great way to spread out your investments and make sure you make good money by using what you know and making guesses about future prices. Since you can trade Futures based on many different types of underlying assets, you can use a futures contract to protect yourself from losses in other asset classes and take delivery of the underlying asset before the contract expires.

    As an online trading company we offer lowest brokerage for intraday trading for our customers. Want to know more? Get in touch with us.