How to trade futures

by Bob F. CCO

How to trade futures

Before proceeding to the study of the futures database, you should familiarize yourself with a number of terms that may be encountered throughout the article.

For starters, do you know what a futures contract is? A futures contract is nothing more than an agreement to buy/sell a specified commodity in the future.

The price for such a futures contract is registered immediately at the time of the deal agreement. What's the point of this? Such an option allows the user to buy or sell a futures contract at a specified price in the future.

How to trade futures and options?

Although it follows from the very definition that a futures contract involves a deal. In fact, most of these contracts do not result in the physical delivery of the asset.

Such trades are most often used by investors to speculate on the price of securities or hedge risk in a portfolio. What is hedging? This is the opening of transactions in one market in order to compensate for the price risks of another market.

For successful trading on futures and options, there are also certain strategies. How to trade in stock futures India?

Leverage. The strategy is based on using borrowed money to increase the potential return on investment. Futures are traded with leverage on margin (collateral for loan capital). This strategy allows you to get more income than his capital allowed without a loan.
Diversification is the distribution of investments in different markets, that is, you invest not in one stock market, but in several projects. This allows you to reduce risk and potentially increase profits over time. While most investors most often prefer two types of investments - individual stocks or mutual funds such as mutual funds or exchange-traded funds (ETFs) - experts generally recommend the latter investment option to maximize diversification.
Hedging. As mentioned above, investors resort to this tool to protect unrealized gains and minimize potential losses.

Where to trade futures in India?

What is the Binany trading platform?

Here you can earn on trading cryptocurrency (all popular currencies are available, including bitcoin), fiat currency, stocks.

GEO - India, Bangladesh, Malaysia, Indonesia, Thailand, Vietnam, Pakistan, Ghana, South Africa, Nigeria, Brazil, Chile, Mexico.
Year of foundation - 2019
Languages - English
Currency - Indian rupee (INR), taka (BDT).
Deposit/withdrawal methods - Perfect Money, PayPall, Neteller, Skrill
Product type - stock, currency, crypto, binary options trading
Application – binany app for android
Bonuses - +100% on the first deposit
Support - chat, mail - support@binany.com, 24/7 support in 10 languages (Russian, English, German, Turkish, French, Indian, Chinese, Vietnamese, Thai, Portuguese)

How do options work? Let’s explore binany reviews to earn money from stock market.

An option is a derivative asset, its price depends on the value of the underlying shares. Based on this, trading has a high risk as well as profitability.

On your lucky day, a 1% increase in the underlying stock could equal a 5% increase in your entire options portfolio. Unfortunately, the situation can be reversed as well. Due to the high risk, investors are not always ready to invest all their funds in options for fear of incurring unexpected losses.

Where there is risk, there is always profit. Where there is profit, there is always risk. Before you start making a profit (up to 90% of the transaction amount), you need to know that every risk, like every income, is fixed in advance.

As mentioned earlier, closing a deal is one of the easiest and most affordable ways to make money. The minimum stake (in other words, the amount of the transaction) on Binany.com is 30 rupees. And the minimum deposit amount is 300 rupees.

What's the point of this process?

First you need to make a deal. We choose the expiration time (that is, the option closing time) and wait for the end of precious seconds. The platform will check if you made a correct prediction, and if it turns out to be correct, then you will receive a profit of up to 90% of the invested amount.

Binary options are a relatively new financial instrument with which a trader can trade precious metals and oil or currency pairs (liquid goods). Simply put, this is a bet with two possible options: a correct forecast and a profit, or a wrong forecast and a loss of investment.

They take part of their name from the structure of the trades themselves, since each trade has two ("bi") possible outcomes.

Basics of Futures Trading

If you have already reached this section, then you are familiar with the basic long and short positions. A futures spread is a trading method in which a trader will take two positions at once at the same time. What is it for? In this way, the investor benefits from a divergence or inefficiency in price while reducing risk.

How to trade futures spreads?

The main purpose of trading is to profit from the difference between two trades. If we look at an example, it will look something like this: a trader believes that an excess of grain is expected in the market, this will entail a decrease in the price of grain in the near future.

To get the spread and capitalize on it, an investor sells the last month's grain contract and buys the next month's contract - but only after the glut hits wheat prices. And in the event that the price movement goes as expected, the trader wins.

How to trade in stock futures India?

In India, such transactions can be carried out on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). A few tips for beginner traders:

Learn the main tools and markets in this area.
Explore past trends
Determine your approach to trading, outline a strategy
Practice on a simulated trading account online
Open an account
Organize Margin Money
Place a buy/sell order with a broker

Benefits of trading in the future

Profits and losses have no limit in trading futures contracts - this is due to daily price fluctuations, so you should immediately weigh all the pros and cons in this area of trading.

pros and cons of futures trading

Plus	Against
Futures contracts are used to hedge prices in the upcoming market It is possible to lose even the initial margin	Possible to lose a favorable price advantage
Investors can save, pay upfront using margin Possible to lose a favorable price advantage	The ability to speculate with the futures price in the direction of the asset's underlying value in the market Using margin necessarily has consequences
Futures contracts are used to hedge prices in the upcoming market It is possible to lose even the initial margin	Possible to lose a favorable price advantage

How to calculate profit in futures trading?

Every trader needs to know how the market in which transactions are made calculates profit and loss. To calculate futures trading profits, you need to know the contract size, the tick size, the current trading price, and the material unit for which you bought or sold the contract.

Currently, there are convenient online calculators that will allow you to quickly calculate your trades. Future trading profit calculation will allow you to calculate the profit in advance or, on the contrary, identify possible losses from an upcoming or current transaction.