Wednesday, March 4, 2020

ADVANTAGES OF FUTURE TRADING AS COMPARE TO STOCK


There are many things that make futures more appealing for brokers and investors, where there are advantages of future trading there are HIGH chances of losses also. The basic advantage is margin for particular stock. As most of A group stocks need only 7–15 % margin to trade Futures.
1.       Futures allows you to go for short sell while stock allows but you have to cover it on the same day which will not give to take benefit of gap down opening when their is certain specific event.
2.      Stocks which come under F&O segment are much more liquid compare to cash stocks. So you can have easy entry and exit points for the stocks.
3.      Futures contain some specific lot size which differs from stock to stock. So you can choose particular stock in future as of your risk and volatility of stock. As like to only cash stock there will not be any trade problem like. Either you will get executed or else not. while in stock sometime it might happen that you want get full fill of your quantity and price move in your direction and you miss the opportunity.
4.      Coming to charges its less compare with stocks. as you carry stock on delivery base so there might be 0.8–1 % of brokerage you pay with some broker while in futures your brokerage will be much lesser compare to it. As there is not more difference in carry Futures.
There is only one drawback comes into my mind is that risk is more compare to cash as it contains lot size. Sometime people may want to go with less quantity and want to build it with time. Which will not be possible to do in Futures? One more dis advantage is that its only for 1 month so you can’t go for longer term in Futures as its for Short period only.


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