How to do Futures Trading in India & what is a future contract?

Let’s begin with understanding the futures contract. A futures contract is a kind of contract in which two different sides agree on the price of a commodity that will be given in the future. If you purchase a futures contract, you are agreeing to buy something that is not available at the time, but is available in the future. When investing your money into a futures contract, it is made pretty simple; you do not have many responsibilities. Most investors chose to invest in futures because it hedges the risk. Futures are mainly looked at as just a financial tool, but they are much bigger than that and it is always advised to learn how to trade futures before getting into futures trading.

Futures contracts were created to make it easier for buyers and sellers and to have a way for investors to manage their risk. The futures market takes a lot of studying to understand how it truly works. Keep in mind that investing in anything can have great risk; even futures come with a risk. Trading futures is just like trading anything else, you need to have a strategy to make it work for you and you need a lot of practice before you can expect to be good at it. Futures contracts have made it easy for people to pay for things across the world with no problem. The technology today has made it very easy for anyone to invest in anything. You don’t even have to leave your house.

When you buy something like internet for your house, you are given a price that you will have to pay every month for the time that you have the internet. You are in a contract that says that you will pay a certain amount of money at a given time and receive internet every month in return. Futures contracts are very similar to that. This contract is that you will pay a certain amount at a certain time; it doesn’t matter if the price value goes up or down, you will still have to pay that price. By getting into a contract like this, you have lowered the risk of having to pay more money, but you have increase you risk of having to pay more if the price decreases.
FYI: Please be advised that Indian taxes on such financial instruments could be a little different, so it is always advised to contact an expert tax consultant.

In a nut shell, this is how a futures contract works, only not with setting up internet in your home, many other things are involved. So anything that you get into and sign a futures contract for will have a set price and a set time in the future. The price and time will not change, no matter what. It is the futures contract that is purchased and sold in a futures market.

The futures contract has to sides, the side that agrees to sell a commodity at a given price on a given date, and the side that agrees to buy a commodity at a given price on a given date. There can not be a futures contract without both sides. The price, the date, the commodity, and the quality of the commodity are all written into the futures contract. The contract is very specific. The price is of course negotiated and agreed upon between the two sides.

A great emerging market to trade such kind of derivative product is the Indian financial markets. Reason being the recent upsurge in the demand of capital and economic growth, and besides that many analysts believe that the future of India is very bright.

One of the top websites to trade derivates in India, including futures and options & get Indian futures charts, live news and real time quotes on trading online is

One thought on “How to do Futures Trading in India & what is a future contract?

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