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Aravind replied to the topic What is technical analysis? in the forum Understanding the Price Movement 8 years, 3 months ago
Technical Analysis is the study of Price and Volume movement of an index / share
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Aravind replied to the topic What is call option and PUT option? Who decide the premium? in the forum Essentials of Trading Instruments 8 years, 8 months ago
CALL OPTION:
If a Ā trader expects price to go up above a particular strike price before the expiry date, then he buys the call option contract from seller by paying the premium. The seller takes the risk of compensating if the price increases above the strike price. Risk is limited to the premium amount for the buyer.
PUT OPTION:
If a Ā trader e…[Read more]
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Aravind replied to the topic What are derivative instruments? in the forum Essentials of Trading Instruments 8 years, 8 months ago
Future, options ( Call/Put) are part of derivative instruments. They represent only contractual rights of buying/selling the underlying asset, not the actual asset value of the company.
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Aravind replied to the topic What are derivative instruments? in the forum Essentials of Trading Instruments 8 years, 8 months ago
Future, options ( Call/Put) are part of derivative instruments. They represent only contractual rights of buying/selling the underlying asset, not the actual asset value of the company.
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Aravind replied to the topic What is Spot / Cash market? in the forum Essentials of Trading Instruments 8 years, 8 months ago
Cash/spot market refers to the equity market where the shares of listed companies are traded.
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Aravind replied to the topic What is Spot / Cash market? in the forum Essentials of Trading Instruments 8 years, 8 months ago
Cash/spot market referes to the equity market where the shares of listed companies are traded.
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Aravind replied to the topic What is Equity market? in the forum Essentials of Trading Instruments 8 years, 8 months ago
Place where the shares of listed companies are traded. It is also referred as cash/spot market
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Aravind replied to the topic What is the Pro / Cons of Equity market from tradersā perspective? in the forum Essentials of Trading Instruments 8 years, 8 months ago
Pros:
If shares bought , they become co-owners of the company and are entitled for dividends, bonus share etc.
Settlement would be made in T+2 days.
Cons:
Huge capital is required.
Profit or loss is only notional unless realisation (actual selling).
Any short position created has to be squared off on the same day.
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Aravind replied to the topic What is the role of exchange in derivative instruments? in the forum Essentials of Trading Instruments 8 years, 8 months ago
Exchange creates the derivative instruments and the rules and regulations reqiured for a trader to trade on derivatives.
Exchange facilitates collection of Ā margin from future contract buyers / sellers and Ā also collect premiums in case of call option sellers and from Put option buyers. The amount is refundable once the contract is c…[Read more]
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Aravind replied to the topic What is Futures contract? in the forum Essentials of Trading Instruments 8 years, 8 months ago
Contract made between a buyer and seller for the product at a specified future price and future date.
Contract to be honored by both parties. Settlement is on a daily basis (MTM)
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Aravind replied to the topic Why should a trader need the futures/call/put? in the forum Essentials of Trading Instruments 8 years, 8 months ago
Buying huge quantities of share requires high capital.
Future / call/put requires lesser capital to trade when compared to actual purchase with cash.
Risk is lower while rewards are high if proper analysis is made as opportunities to utilize the price movement to make money is high.
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Aravind replied to the topic How option contract differ from future contract? in the forum Essentials of Trading Instruments 8 years, 8 months ago
FUTURE CONTRACT:
Buyer has the rights to buy.
Seller has the rights to sell.
Both buyer and seller have to honor the contract.
When the price moves in their favor, buyer / seller get rewarded.
settlement is done on a daily basis using (MTM)
OPTIONS CONTRACT:
Buyer has the rights to buy.
No rights for seller. Seller receives premium form…[Read more]
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Aravind replied to the topic What are Margin / MTM / Premium / Strike Price / Expiry Date / lot size? in the forum Essentials of Trading Instruments 8 years, 8 months ago
Margin- Refundable deposit made before entering into a contract with buyer / seller
MTM- Mark to market – In futures trading, the settlement is done on a daily basis for the underlying / purchased contract.
Premium – The amount the buyer or seller is willing to pay to enter into a future /option contract.
Strike Price – PriceĀ above or below…[Read more]
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Aravind replied to the topic What are Margin / MTM / Premium / Strike Price / Expiry Date / lot size? in the forum Essentials of Trading Instruments 8 years, 8 months ago
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Aravind replied to the topic How Stock trading take place? ā Explain the role of broker/exchange/ SEBI/ Govt/ BANK? in the forum Basics of Stock Trading 8 years, 8 months ago
Broker: Executes the buy / sell order on behalf of trader/client.
Exchange: Marketplace to buy / sell orders / shares.
SEBI: Regulatory body for the stock markets and orders are executed based on guildelines devised by them.
Govt: No role in day to day trades.
Bank: Executes Money transaction by linkingĀ to the broker account
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Aravind replied to the topic How to place order? Types of order? Validity of order? in the forum Basics of Stock Trading 8 years, 8 months ago
Order can be placed online using broker website, or , call the broker and place order on your behalf. the calls will be recorded by the broker.
Types of Order – Buy Order & Sell Order.
Validity of order- For derivatives, positional future or option orders, valid till last thursday of the month. For derivativesĀ intraday ,Ā <span s…[Read more]
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Aravind replied to the topic Is Stock trading is gambling or Business? How? in the forum Basics of Stock Trading 8 years, 8 months ago
Stock trading is a business, if the trader does analysis , assess risk Vs reward andĀ Ā prepares a trading plan for the particular stock. Then he enters the market to execute the plan and generate income(profit).
But without any analysis or understanding , if trading is done by pure luck factor , then it becomes a gambling.
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Aravind replied to the topic How Stock exchanges ensure the traders counter party risk? in the forum Basics of Stock Trading 8 years, 8 months ago
Trading orders are executed only through brokers. Brokers have already provided deposit to the exchange. So in case of any risk, there is no delay in settlement with exchange, as the funds already deposited by broker will be utilized. In that case , broker Ā has to do the settlement with trader on his own.
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Aravind replied to the topic How much time required to do trade? in the forum Basics of Stock Trading 8 years, 8 months ago
Order placement is within few seconds. Execution time will depend on the price quoted by you for buy/sell and your position in the counter.
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Aravind replied to the topic What is positional trading and Intraday trading? in the forum Basics of Stock Trading 8 years, 8 months ago
Positional trading: shares / derivative instruments bought and held for more than one trading session.
Intraday trading: Derivative instruments bought / sold on a day and sold / bought before the end of day in order to close the position for the stock.
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