What is future market? Back

Future market trading is just like forward market trading. A future market where you can buy or sell a derivative. It is an agreement between two traders to buy and sell a future contract at a certain price on a certain date with fixed qty.

The main purpose of future market trading is to hedge and speculation.

Future market is highly volatile market so spot trader/exporter/importer want to protect them self so that in future they will not lose. For protection hedgers open a position against the spot market to protect the trade.

In speculation, a trader is assuming about the derivative that in coming month that it will advance. In that case a trader takes long position in future market. He will earn only if price advance from his purchased price but if his predication moved against his trade he will lose the money. In the future market you have to pay a small initial margin against the asset which is fixed by the exchange. After the trading in future market it will open till the expiry date of that contract. You can reduce your position any time but before expiry you have to square off the position. Where the trade is in loss or profit doesn’t matter in that case exchange will release the initial margin you paid for the future trading. Debit and credit will reflect in your account every day after the closing of the market.

We tried to explain about future market trading through our blogs but it is not possible in a small blog to explain the all terms for future market trading. For detail of future trading join NIFM- Call 9910300590, www.nifm.in