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Dr Faiz replied to the topic How option contract differ from future contract? in the forum Essentials of Trading Instruments 7 years ago
The main difference lies in the obligations to execute the contracts.
In the case of futures contract the buyer or seller is obligated to complete the contract at a specified date and price.
In case of Options contract the buyer or seller does not have the obligation to execute the contract . If in favour of the buyer or the seller it can be…[Read more]
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Dr Faiz replied to the topic What is call option and PUT option? Who decide the premium? in the forum Essentials of Trading Instruments 7 years ago
<span style=”color: #000000; font-family: Arial, sans-serif;”>Buyer of a call option has the right, but is not obligated, to buy an agreed quantityof stocks or bonds at a future date for a certain price (the strike price).This is a Call Option. </span>
<span style=”color: #000000; font-family: Arial, sans-serif;”>Buyer of a put option has the r…[Read more]
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Dr Faiz replied to the topic Why should a trader need the futures/call/put? in the forum Essentials of Trading Instruments 7 years ago
Futures contracts are available for stock indexes to commodities like gold. This is a contract between two parties to buy a certain product at a fixed price on a future date. A trader may need futures or options to protect his portfolio against any unfavourable move in the markets. Suppose the trader has a port folio worth Rs 1000/- and e…[Read more]
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Dr Faiz replied to the topic What is Futures contract? in the forum Essentials of Trading Instruments 7 years ago
Futures contract is the most common type of derivative . It is an agreement between two parties to sell an asset at a fixed price in a future date .
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Dr Faiz replied to the topic What are derivative instruments? in the forum Essentials of Trading Instruments 7 years ago
Derivative is a security with an underlying asset that gives it a value.The market fluctuations on that asset will affect the price of the derivative . Different types of derivative instruments are :Futures contract, Options , swap, forwards.
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Dr Faiz replied to the topic What is Spot / Cash market? in the forum Essentials of Trading Instruments 7 years ago
Whenever a trade happens on the current market price with a buy and a sell transaction where the cash is settled on the spot and delivery of the purchased commodity also given is a spot or cash settlement. It can happen wherever the infrastructure required is present . Equity ,commodity, currency purchases can be done in spot/cash market. The…[Read more]
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Dr Faiz replied to the topic What is Equity market? in the forum Essentials of Trading Instruments 7 years ago
The equity or stock market is a place where shares of a company can be bought or sold. It is an important part of the economy because the company can reach the public funding by issuing shares and the public can be a part owner of any company by buying into the shares of that company.
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Dr Faiz replied to the topic What is the role of exchange in derivative instruments? in the forum Essentials of Trading Instruments 7 years ago
<span style=”color: #222222; font-family: sans-serif; font-size: 14px;”>The members of the exchange hold positions in these contracts with the exchange, who acts as central </span>counterparty<span style=”color: #222222; font-family: sans-serif; font-size: 14px;”>. When one party goes </span>long<span style=”color: #222222; font-family: s…[Read more]
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Dr Faiz replied to the topic What is the difference between Trading and Analysis? in the forum Basics of Stock Trading 7 years ago
<span style=”color: #404040; font-family: ‘Source Sans Pro’, arial; font-size: 18px;”> Fundamental analysis is popular to get an idea of what to expect in the future. Technical analysis looks at the past in an attempt to see what may happen.These are the primary tools traders and investors use in their search for profitability.Analysis is the pl…[Read more]
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Dr Faiz replied to the topic Can I trade NIFTY, SENSEX ? in the forum Basics of Stock Trading 7 years ago
<span style=”color: #3b3a39; font-family: Georgia, ‘Times New Roman’, Times, serif; font-size: 14px;”>Buying and selling the same asset across two different markets like BSE and Nifty, profiting from the price difference is possible . This is called Arbitrage. There as many such traders using automated algorithmic software to find these price…[Read more]
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Dr Faiz replied to the topic Is Stock trading is gambling or Business? How? in the forum Basics of Stock Trading 7 years ago
Trading with knowledge and discipline is the difference. Evaluating the risk to reward ratio is the knowledge . Deciding on a trade plan with no emotional attachment to the decisions made is discipline. When the reward is greater than the risk taken and this is done on proper technical analysis it is a trade.
When decisions are made using emotion…[Read more]
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Dr Faiz replied to the topic What is positional trading and Intraday trading? in the forum Basics of Stock Trading 7 years ago
Intraday trading is the buy and sell of shares within one trading day .
Positional trading is buy and hold method , for a day or a week or month or longer depending on the trade plan .
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Dr Faiz replied to the topic Who decide the stock price? in the forum Basics of Stock Trading 7 years ago
<span style=”color: #000000; font-family: Helvetica, Arial, Helvetica, sans-serif; font-size: small;”>The stock price is simply the price at which a willing buyer and seller agree to trade.When a company issues an IPO , their investment banker or the underwriter to the issue evaluates the company for assets , performance and future growth po…[Read more]
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Dr Faiz replied to the topic How to place order? Types of order? Validity of order? in the forum Basics of Stock Trading 7 years ago
Orders can be placed in person , phone call or using the brokers on line platform . It can be a buy or sell order.
Types of orders are: Market order
Limit order
Stop order
Conditional order
Validity of order:
Day order ,Good till canceled ,Good till date, Immediate or cancel, fill or kill,all or none, at the open , at the close, minute
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Dr Faiz replied to the topic Why do people choose stock trading? in the forum Basics of Stock Trading 7 years ago
People choose to trade in the stock market to make a profit .It is also an effective way to over come inflation. Stocks provide high returns to the investor.
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Dr Faiz replied to the topic What is long / short / long unwinding / Short Covering? in the forum Basics of Stock Trading 7 years, 1 month ago
Long – A long trade is buying shares with the intention to sell at a higher price in the future and realise a profit .
Long unwinding – The sale of a share after it has reached the desired target and exiting is long unwinding .
Short-A short trade is initiated by selling first with the expectation to buy back at a lower price and make a…[Read more]
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Dr Faiz replied to the topic How much time required to do trade? in the forum Basics of Stock Trading 7 years, 1 month ago
The actual trade happens instantaneously based on the demand -supply position. Once a bid order is placed if a price is quoted it will come in to the queue system based on the price. if it is the highest bid then it will get matched to the lowest ask price and executed immediatly. If the bid is lower than the lowest ask price it has to wait till…[Read more]
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Dr Faiz replied to the topic How Stock trading take place? – Explain the role of broker/exchange/ SEBI/ Govt/ BANK? in the forum Basics of Stock Trading 7 years, 1 month ago
After a trading plan is decided ,the order is placed with a broker or a sub broker to buy or sell a share. This can be done by going in person or through phone or on the internet. To this order a time record is done and a contract note is given to the trader. This is an important step in the stock trading .
The broker takes the order from the…[Read more]
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Dr Faiz replied to the topic What happens if I quote high price to buy a stock compared to its current market price? in the forum Basics of Stock Trading 7 years, 1 month ago
Quoting a high price takes you to the top of the bid list and it will get executed with the lowest ask price in the seller window immediatly. But sale happens only at the low ask price only and thus the market cannot be manipulated by anybody .The market price is the last executed order and it need not be the same when we place an order. It may…[Read more]
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Dr Faiz replied to the topic What is Trade Plan? Why it is essential in the forum Basics of Stock Trading 7 years, 1 month ago
As always we trade with knowledge and discipline. This means we should do a proper technical analysis and decide which share to invest , when to get in to the market , and decide when to get out. Also a proper stoploss is decided in case the decided stock does not perform as expected . This gives a direction to the whole transaction from beginning…[Read more]
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