What Is The Best Way To Get Started In Futures Trading?

Futures and options are the part of derivative and mostly it is used for hedging by institutional investors.In order to initiate trading in FUTURES you have to understand how it works and how can get profit with your own analysis and experience.
Options and futures are both financial products investors can use to make money or to hedge current investments. Both an option and a future allow an investor to buy an investment at a specific price by a specific date. But the markets for these two products are very different in how they work and how risky they are to the investor.
Here are the few key things that you can draw your attention, if you want to embark trading in futures contract of the Stocks or Index.

Step 1: Understand how futures work — and the risks
The investor may instead decide to buy a futures contract on RELIANCE. One futures contract has as its underlying asset 250 shares of reliance. This means the buyer is obligated to accept 250 shares of reliance from the seller on the delivery date specified in the futures contract. Assuming the trader has no interest in actually owning the reliance, the contract will be sold before the delivery date or rolled over to a new futures contract.

RISK:
As the price of RELIANCE rises or falls, the amount of gain or loss is credited or debited to the investor's trading account at the end of each trading day. If the price of Reliance in the market falls below the contract price the buyer agreed to, the futures buyer is still obligated to pay the seller the higher contract price on the delivery date.Keep note that if it fall then whatever amount it give fall that will be multiplied by 1 lot that includes 250 shares, hence you have to be prepare to bear that much loss that is the crucial downside risk in futures.

Step 2: Pick trading strategy from your own or from any research analyst.
A best practice for any trade is to understand the risks and price targets prior to entry or exit in the underlying asset. Because of the increased risks of trading futures, contracts should be carefully monitored. In futures entry and exit point matters the most. This is where the different order types to buy and sell may come into play and help manage the trade. A limit order offers control over the entry and exit prices. If you know the levels in which to enter and exit a trade these limit orders, as well as a stop loss can help traders execute their strategies more efficiently. You should subscribe or associate yourself with trading research analyst of the Indian stock market.

It is very profitable, if you know how to manage your risk. Futures can be a very good way to make money but it is also number one reason to lose money because of Leverage. It can make you rich quickly but can make you poor even quicker.
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