Wednesday, September 4, 2013
NIFTY TRADING IN FUTURES MARKET
The Futures contain the contract. These contract called Futures Contract. A futures contract is a standerdized agreement between a buyer and a seller to trade in a item or a grade of a item. The item or Underlying assets (The item in which trading held) may be an commodity product, a metal mineral or energy products, a financial statement or foreign currency. The basic rule of the Futures trading is the buyer and the seller will agreed on a future price of that particular item on which the trading will be held.
In finance, a futures a derivatives (or a derivative). This means that its value derives from the price of another product. That which relates to the future known as the underlying asset . The futures contracts have standardized specifications. In the case of potato futures, for example, states that it is 25,000 pounds, the variety Bintej , a minimum diameter of 50 millimeters, suitable fries and grown on clay soil. A futures contract may also include such 5000 bushels of corn a certain quality or 1000 barrels of oil.
Definition of a Future-
Before you start trading in futures, you know what actually is a future. A future is an agreement to an underlying asset at a pre-set time to buy or sell. Most futures have a cash settlement procedure. Make sure you always find out what the specific contract for its future. FTI futures are the futures that have as underlying the AEX. They have a lot size of 200. Each point move in the AEX stands for a gain or loss of 200 euros.
In other words A futures contract is a legally binding agreement to deliver when promoting, or receiving, if you buy from a specific commodity, index, link, or currency at a predetermined date or price. A futures contract can include everything from a standard size amount of grain, oil, or a country forex . The amount and date of delivery with the agreement set, but in almost all cases, the offer was not taken as contracts are bought and sold for speculative or hedging.
Futures are used by both those who are the real raw materials and by traders. For example, in May a farmer plants some corn, but do not know what are the promotion of maize in November. It can promote a futures contract for November and "lock in" the future sale of current costs. Around the other hand, traders may buy a futures contract, if it considers that the cost of a security is post value, or they can promote a futures contract, if it considers that the price of security is post to refuse.
Futures are often thought of in exactly the same category as choices. Although they each derivative, in that they derive their value to a basic security, there is a very important difference. Although the right choices, but not the obligation to buy or promote the underlying value to, a futures contract is a legally binding obligation to purchase or to promote the exact same material. So, while options for your loss expenses paid for that choice to limit the trade in futures lead to a reduction of your entire investment and more with this requirement.
An additional difference between the futures and stock markets that use of the word margin. Although the contract sizes for currencies are large (often the equivalent of more than $ 100,000 for a single agreement) took a buyer does not need to buy or sell a full contract. Rather, a margin deposit around the agreement enforced, it is in fact a "good faith" money to your obligations to ensure the full amount of the futures contract. Minimum margin requirements vary by agency, but usually only a fraction with a total contract value, and are not linked to the actual price with the agreement.