This shows so much prospect in the Indian Stock Market futures that those who would like to increase their probability of getting good returns on investment also would like to do the same. However, it may not be easy especially for a novice to navigate through them to get to his or her area of interest. In this detailed step by step guide, it becomes our endeavor to make you understand from every nook and corner, how it would be easier to approach to open stock trading account in India as a winning strategy.
With an insight into the dynamics of this market and the information highlighted in this article, tips and tricks to follow, you stand better chances of making good decisions about futures trading and gaining from the process.
1. Understanding the Basics: What You Need to Know Before Opening a Futures Account
However, it is recommended that one should understand the basics, before getting into trade with the future contracts. Futures contracts are binding contracts to purchase or sell standard quantities of the same assets at the agreed price in the future. These contracts are written on many products such as stocks, gold, oil, silver, foreign exchange and shares index. Frequently traded futures contracts in India are related to stock market indices notably Nifty 50, individual shares, and precious metals and crude oil.
Another advantage that might be mentioned in connection with the trading in futures is the fact that specified larger positions can be managed with a lesser amount of money with help of what is called leverage. Similarly, this one is a ‘double-edged sword’ because the good of bringing is also a bad of leverage.
2. Choosing the Right Broker: Factors to Consider for a Smooth Trading Experience
The first activity that will be near you when you decide to be involved in futures trading is the process of selecting a right broker. We are fortunate now to have several brokers in India that offer futures trading to the client and each firm has its strengths and weaknesses. Therefore, it is possible to conclude that the reputation of the broker can be mentioned as one of the parameters which should not be altered in any way.
The next factor that should be evaluated is the trading platform of the broker. This means that it has to be easy to navigate, fast, and as full-featured as it will be in the trader’s interest for it to be. There is no restriction when it comes to choosing the trading platform any will suffice simply make sure that it offers live streaming of the market data plus charting tools and many types of orders. Besides, it is also important to examine the mobile app of the broker as mobility could be pivotal in today’s volatile market.
3. Navigating the Account Opening Process: Step-by-Step Guide to Getting Started
The next thing that you require to do after you have chosen your broker company to trade is to Make futures trading account. This process is often preceded with an online application form whereby one is required to fill full names, physical address, phone number and PAN. You will also have to submit proof of identity and the address, preferably by means of the Aadhaar card, passport or the driver’s license.
After applying on this platform one will be required to go through the Know Your Customer (KYC) process which is mandatory because of the regulation of the Indian government. This may require a face-to-face verification which is often known as Live Verification or the Video KYC depending on the broker. For the purpose of this step, you will have to furnish some more information about yourself, such as your annual income, worth and the kind of investment you are looking to make. Expect to be asked questions about your experience as a trader and your tolerance level towards risk as this will determine the brokers suitability of the futures trading business.
4. Developing a Winning Strategy: Education and Research for Successful Futures Trading
It has been found out that futures trading does not start with a win – it is with a lot of learning and strategizing. To start with, learners should read up on as many futures contracts that are presented in the Indian market and the different specifications that come with them. Know and differentiate between the contracts’ size, tick size and their expiration time corresponding to the different assets. It will assist in the formulation of sound strategies which contracts are to be traded and how best to go about it.
As a matter of fact, this technical analysis ability is rather essential to speculators in the futures markets. Understand how to interpret charts, analyze trends, and use a number of technical tools to make trading decisions.
5. Managing Risk: Techniques to Protect Your Capital and Maximize Returns
Risk management in perspective to Futures trade cannot be overemphasized due to the high risk leverage that is usually associated with the trading activities and the likelihood of making more losses. Another method that is used in risk management is positioning which is said to be one of the key strategies in the management of risk. This form of trading is always supported by the fact that the total trading capital should not be utilized more than 5% in one trade.
Another very important risk management tool that can be employed is the stop-loss orders. A stop-loss order is one that closes your position once the price has dropped (or risen) by a given value. It assists in minimizing your possible losses and also removes emotion from the decision making process of exiting a wrong position. But you should know that in fast moving markets, there can be slips and thus your order may be executed beyond the stop level that you set.
Conclusion
It can be one of the thrilling phases in individuals’ lives to open a futures trading account opening in India. Learning the fundamentals of futures trading, choosing the proper broker, opening the account, preparing a good plan, and incorporating the right risk management plan will help you a lot in this exciting field.
