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Yeshwanth replied to the topic What is Spot / Cash market? in the forum Essentials of Trading Instruments 8 years, 4 months ago
In a spot market , the asset is sold for cash and it is immediately delivered unlike futures market in which delivery takes place in the future.
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Yeshwanth replied to the topic How option contract differ from future contract? in the forum Essentials of Trading Instruments 8 years, 4 months ago
In a futures contract , both the buyer and seller have the right and obligation to buy/ sell the asset. In an option contract either the buyer or seller has the right but no obligation to buy / sell ( depending on whether it is a call or put option).
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Yeshwanth replied to the topic What is call option and PUT option? Who decide the premium? in the forum Essentials of Trading Instruments 8 years, 4 months ago
A call option is a contract in which the buyer is the call option has the right but not the obligation to buy a stock at the agreed strike price in the future date but the seller has the obligation to sell the stock if the buyer exercises the option.
A put option is a contract in which the buyer of the contract has the right but not the…[Read more]
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Yeshwanth replied to the topic What is the role of exchange in derivative instruments? in the forum Essentials of Trading Instruments 8 years, 4 months ago
The exchange acts as a regulator for derivatives that are traded over the exchange. It ensures that the margin money is transferred from one party to the other party regularly in accordance with the price fluctuations thereby reducing the risk of default.
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Yeshwanth replied to the topic What is the role of exchange in derivative instruments? in the forum Essentials of Trading Instruments 8 years, 4 months ago
The exchange acts as a regulator for derivatives that are traded over the exchange. It ensures that the money is transferred from one party to the other party regularly in accordance with the price fluctuations thereby reducing the risk of default.
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Yeshwanth replied to the topic What are derivative instruments? in the forum Essentials of Trading Instruments 8 years, 4 months ago
Derivative instruments are those instruments which derive their value from an underlying asset such as commodity, financial instruments, bullion etc. Commonly known derivative instruments are futures and options.
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Yeshwanth replied to the topic Why should a trader need the futures/call/put? in the forum Essentials of Trading Instruments 8 years, 4 months ago
Traders use futures and options to make profits out of the price fluctuations pertaining to an asset. Moreover it helps a trader to hold a short position for a long duration of time.
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Yeshwanth replied to the topic What is Futures contract? in the forum Essentials of Trading Instruments 8 years, 4 months ago
It is a contractual agreement to buy or sell a commodity or a financial instrument ( I.e the underlying asset) at a pre determined price in the future. It is settled either through physical delivery or cash.
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Yeshwanth replied to the topic What is Equity market? in the forum Essentials of Trading Instruments 8 years, 4 months ago
Equity market is the place where shares are exchanged. It is a spot market.
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Yeshwanth replied to the topic How to place order? Types of order? Validity of order? in the forum Basics of Stock Trading 8 years, 5 months ago
the order is placed with the stock exchanges through the registered brokers. the brokers act as intermediaries in placing their client’s order with the exchanges.
the two types of order are buy order and sell order. an order placed is cancelled when the market closes on the day in which it is placed if it is not matched or executed. in other…[Read more]
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Yeshwanth replied to the topic What is the difference between Trading and Analysis? in the forum Basics of Stock Trading 8 years, 5 months ago
trading merely involves placing an order and the further matching (deal) and execution(settlement) of order. Analysis involves identifying the market trends and determining the entry points and predicting outcomes.
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Yeshwanth replied to the topic How much time required to do trade? in the forum Basics of Stock Trading 8 years, 5 months ago
the time required to trade i.e to place an order is a few minutes.the order is executed only when it matches with the order of the counterparty. however the settlement of shares take place in t+2 days.
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Yeshwanth 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 8 years, 5 months ago
The order will be placed first in the buyer queue. if the quoted bid price is higher than the ask price then the order is executed immediately at the ask price and not the bid price. if the bid price is lower than the ask price , then the order continues to remain in the buyers queue.
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Yeshwanth 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 8 years, 5 months ago
The order is placed to the stock exchange through the registered broker. the order is queued till a counter party places an order quoting the same price. once the order is matched and the deal is made , the settlement takes place after the market close. the money is transferred from the trading account of the buyer to the seller and the shares are…[Read more]
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Yeshwanth replied to the topic What is long / short / long unwinding / Short Covering? in the forum Basics of Stock Trading 8 years, 5 months ago
when the price of a stock is expected to rise , then the stock is bought and sold in the future. This is a long position. long unwinding refers to selling the shares that is already high as the price has increased.
When the stock price is expected to decrease , the stock is sold and then bought. This is short position. However the shares have to…[Read more]
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Yeshwanth replied to the topic Is Stock trading is gambling or Business? How? in the forum Basics of Stock Trading 8 years, 5 months ago
It depends upon the risk and rewards taken up by the trader. If the risks exceed the reward , then the trade is gambling. If the rewards exceed the risk then the trade is business. A trader should always trade with the rewards being equal to or higher than the risk.
<script…[Read more]
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Yeshwanth replied to the topic What is online trading? in the forum Basics of Stock Trading 8 years, 5 months ago
online trading involves trading in a de-materialised form using the internet where the orders can be placed by the buyers and sellers themselves unlike the earlier days in which the brokers had to visit the stock exchanges and shout the prices to the other traders.
<script…[Read more]
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Yeshwanth replied to the topic Who decide the stock price? in the forum Basics of Stock Trading 8 years, 5 months ago
The stock/market price is determined by the buyers and sellers. The demand and supply determines it and the market price in the latest price agreed upon by the buyer and seller.
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Yeshwanth replied to the topic What is positional trading and Intraday trading? in the forum Basics of Stock Trading 8 years, 5 months ago
Intraday trading involves buying and selling a stock in the same day .
Positional trading involves buying a stock and selling it after a few days.
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Yeshwanth replied to the topic Why do people choose stock trading? in the forum Basics of Stock Trading 8 years, 5 months ago
Stock trading is taken up as a profession with the objective of making profits. Unlike investments whose objective is to make money to meet future commitments stock trading helps to make money as a source of income.
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