What is Futures Contract?

It is an agreement between two parties to either sell or purchase an asset at an agreed time during the agreement period (on- or prior to the contract period).

Futures contracts have terms such as trading cycle, expiry dates (one, two, and three month contracts), lot size, and so on. Some futures contracts are settled in cash, while others are physically settled. You can trade on futures if you are 100% certain. Profit and loss will be greatly on the superior side.

If you are in loss, and you are certain about your prediction roll it will be carried over to the next contract. Example: GOLDM (Gold Mini), you would have purchased at Rs. It trades at Rs. 29,000/-. You lose Rs. 10,000/- Rupees, i.e. (Rs. 30,000- Rs. 29,000) * 10, where 10 refers to the lot size.

You can sell your current contract to avoid the loss and purchase the next month’s agreement at the present price (i.e. Rs. 29000. If your forecasts are correct and the rupees rise to Rs. Reserve profits (Rs.10000/-) to exit and make 31,000/-

Why is stop loss necessary?

Our gold and silver futures trading session ends at midnight in India, but the global gold and silver market continues to trade round-the-clock. When the Indian markets open up on the next morning, the share price movements of global markets will be reflected. If you are in any unwinded trading position, you could see your huge loss or massive profit depending on the global price movements. You must always trade with a strict stop loss (SL). I’ve seen traders lose more than Rs.30,000 on a single silver lot in MCX because of global movements within a day.

Please note: Below are examples of index futures and stock futures. These examples are provided without SL (STOP LOSS), WITHOUT BROKERAGE COMMISSION & STATUTORY CHARGES.

How can I buy and sell commodity futures in MCX/NCDEX online trading?

You can either buy 1kg of physical gold or silver if you want to make profits. You will need 28 lakhs to purchase gold. Keep it safe for a while and then sell it. You can also purchase the same 1 kg of gold in the futures markets with a margin of Rs. You can buy it in MCX for 1, 20,000 and then sell it when prices rise. You will need to have enough money to cover the MTM (mark-to-market) if the gold price falls. There are many lot sizes for gold in the MCX. Depending on how much you pay, you will make more or less profit.