The stock future market is a place where the trade takes place for a specific quantity of a standardized future contract. This trade allows for buying and selling of a specific quantity of commodity or shares. The price for the trade is decided today i.e. known as the future price or the strike price which is agreed upon for the delivery on a specified future date. These types of trades are termed as derivatives, and they are traded upon contracts.
The buyer and the sellers are of the opposite opinion that the market may go up according to buyer and down according to the seller. The future contracts are having a fixed expiry also. The motive of future exchange institutions behind such type of trading is to minimize the risk as an intermediary thus it is required that both the parties the buyers and the sellers both put certain amount for the trade that is known as the margin money. The future market price are changed daily so the difference in prices day-to-day are adjusted in the both the parties account so that the profit and loss are calculated properly.
Contracts on financial instruments were introduced in the 1970s. All the terms and conditions of the contract like the time durations, what is to be bought, sold and quantity everything is being decided over by the exchange. The currency which would be used along with the time period all are decided over by the exchange according to the fixed standard. The trade in the future market is maintained under high standards. For designing a contract many parameters are decided, but in order to maintain the liquidity the standards are kept in a limit.
Well trading in the future market is a very safe deal as it involves very less risk as well as minimum investment as far as stock future market is concerned.
The trades are made on the basis of the lot to lot size the profit loss calculations are more easy and clear in comparison to cash market.Futures are traded in nse scrips only.Short selling is available only in future market but not in cash margin money required is not much more in the future market.
The stock future tips given by the advisory companies involve all the major industries as well as the banking sectors which are considered to be the best for investment. The shares having much volume and liquidity are to be chosen for the study and even investment. As the future market involves the minimum risk as the exchange itself acts as a intermediary between the parties, it is advisable to the traders to trade in it. Same is the case with the option market which requires the lowest margin for the trade.
There are n number of future contracts ranging from commodities, securities (stock future), currencies and many other indices etc.