September 1, 2019 at 5:53 PM #186708Nitin BhatiaKeymaster
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Futures Trading Learnings for Beginners is very important as it can potentially wipe off your entire investment. This is part of risk and money management. Normally, it is considered that derivatives i.e. futures and options are not suitable for the retail investors.
In this video on Futures Trading Learnings for Beginners, i have shared my 7 learnings from futures trading.
1. Margin Facility: Due to margin facility, you are potentially buying six times of your capital used as margin. In other words, if the stock moves in another direction by 16% then your entire capital will be wiped off. Also, instead of the margin used, you should consider the total value of the lot for risk and money management.
2. Stop Loss margin requirement: If the stock or index does move in the desired direction then you have to maintain the margin equivalent to the stop loss value in your trading account otherwise your broker will square off your position.
3. You should start futures trading with low volatile stocks.
4. A beginner should start futures trading only if the accuracy of his/her analysis is very high.
5. Avoid additional margin offered by brokers as it is a trap. Overtrading in futures can end your trading journey.
6. Risk-averse investors or traders should avoid trading in futures.
7. If you are not sure about your trade then you should hedge your positions. For example, if you are selling a lot of future then you can hedge your trade by buying options.
It is beneficial to trade in futures only during the strong trading market and you should be on the same side of the market trend.
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