How can I trade on future market?

Derivative are the financial instrument whose value is derived from underlying asset. this are the one month expiry contract that gives the opportunity to deliver the asset or final settlement on fixed future date. there are mainly two types of derivative contract.

OTC : over the counter contract this are customized bilateral contract between two parties like Forward and Swap. in this type of contract some risk are associate. like

Credit Risk

Operational Risk

Exchange Traded Contract: this are standardized format of OTC contract. that limited the risk that are associate in forward and swap. Future and Option

Future are the exchange traded contract. in NSE currently 175 stocks are available in market whose derivative are available. this are the 1 month expiry contract and follow 3 month contract cycle. where you just have to pay a margin amount not actual price of share.

To Trade on future you first need to understood that the derivative or future and option are the contract that you buy or sell for buying an selling the stock on fixed future date that is called the expiry of the contract. for you purchase a bundle or bunch of stock that is known as Lot Size. fro Example SBIN have lost size of 3000 , if you buy or sell single lot means you have work on 3000 share of SBIN that is same in future and option both.

In future you just need to pay margin amount that is 15–20 % of total cost i.e if you buy SBIN 1 lot of 3000 at the price of 300 here your investment would be

3000*300 = 900000

and the 15–20% of margin you need to pay of this 9 lac to Exchange through you are making a contract that on fixed future date will purchase 3000 share of SBIN at the price of 300/- if you didn’t want to exercise this contract can sell it to another person.

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