Stock Future Tips for a Great Start in the Futures Market

Click here to Enjoy Live SHARE MARKET Commentary and for NSE & MCX

Overview
There are different aspects in the futures market and you need to study them to understand how this market works. And not all people use futures, so you got to know who goes for futures markets. Moreover, to become a successful trader in this market, you need to make use of strategies. We, in our stock future tips shall try to touch upon these for your benefit and awareness. Let us first delve into a little bit of history about futures market. The futures market was actually set up one and a half century back in North America. It was not the type of futures market that we see today but somewhat similar yet the concept was the same. Grain markets were centralized during the mid-nineteenth century for the benefit of the farmers who earlier had to face losses due to their ignorance about demand and supply. The concept which began with forward contracts is today known as futures contracts.

Modern Futures Markets
Much has changed with the passage of time. Apart from agricultural commodities, futures market also deal in currencies, treasury bonds, securities, etc. These are also known as financial instruments. The market is a meeting ground for people coming from diverse backgrounds like farming, export and import, manufacturing and investment, etc. Moreover, with the backing of modern technology, one can now see the price of any commodity from anywhere in the world. For example, a European buyer can place his bid on the produce of an American farmer.

Profit & Loss
Regarding profit and loss in the futures market, the same is calculated daily as it depends on the market’s daily movement. We can cite a good example here in our stock future tips to add clarity to this aspect. A buyer and a seller enter into a futures contract and fix the price of the commodity at $10 per unit. The next day, the price of that commodity increases to $11. Now as the seller is obliged to sell at $10 as per the contract, he loses $1. On the other hand, the buyer is obliged to pay $10 and so he makes a profit of $1. So this is how things work in the futures market.

From the Economic Perspective
The futures market has great economic importance because of being centralized and highly active. If you are looking for vital market information then a good source can be the futures market. Being highly competitive, the market can be used as an important economic tool for price determination. The price discovery process in the futures market, analyses the various factors that affect supply and demand to predict commodity prices for the present and the future. It is a highly transparent process which delivers information from throughout the world continuously and constant absorption of the same by people brings forth changes in commodity prices.

Reduced Risk
In contrast to stocks, purchases made in the futures market have a reduced risk. This is because of the pre-determined price which allows people to decide the quantity they would buy or sell. For a retail buyer, it means reduction of final cost. This is because with the risk being less it lowers the chance of price increase by the manufacturer (who might do so to make up for cash market loss/profit).

Know Your Rights
For the new investor, we provide stock future tips about their rights in respect to the futures markets. So like other markets, the futures markets in every country is regulated by a body or a Commission duly formed by the government of the said country and which functions independently. There might be also other self-regulatory bodies with government authorization and supervision. If you want to buy or sell futures contracts or in order to conduct business, you must first get registered with the respective bodies/Commission. Powers are vested on these agencies to conduct criminal prosecution against those who indulge in illegal activity or violate the code of conduct and business ethics. Such prosecution can debar the guilty from participating in the futures markets permanently. As an investor, it is your prerogative to make yourself aware about these regulations for your own benefit. Keep in mind that these agencies can take up your case on a priority if you face any conflict or loss because of the illegal act of somebody.