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What is stock future ? How to trade in Stock Future?

To understand the Stock Future, we should understand first two things first one is contract and second one is lot size.

A) Contract - Each Future having a duration and on or before that time we have to settle that. Example, suppose SBI Future 26 Sep 2018. It is a contract which will be fully closed by exchange on 26 Sep 2018. Normally a contract duration approximate 3 months. Means if September 2018 expiry is running, then you can buy the contract of October and you can also buy November Contract also. Hope this word contract clear to you now.

B) lot size - Exchange has defined a particular lot size for each and every stock according to their market price.

So let us suppose, you bought SBI Future today at 300 and just after 30 min it becomes 303. It means you are in profit now. If you want to book this profit you can sell your future at 303. So what will be your profit . Your profit will be Rs. 9000.

303 ( Sell price ) - 300 (Buy Price) ] x 3000 = Rs. 9000 (Profit)

But suppose you bought at 300 and till market closing it not moved and came down to 298, it means you are loosing Rs. 6000 at closing time. But you dont want to book this loss, so no problem, you can carry this position for next day. If your account balance was Rs. 2 Lakh then Rs. 6000 will be debited from your account and margin will also be blocked. Now if next day SBI Future open at 305 and you want to book profit then just sell it at 305 and your profit will be Rs. 15000. But your account will be credit according to its previous day closing price. As we assume that it closed at Rs. 298, so your account will be credited with Rs. 21000.

305 ( Sell price ) - 298 (Previous day closing Price) ] x 3000 = Rs. 21000 (Profit)

If you bought SBI Nov Future on 15 Sep 2018 and expiry date is 29 Nov 2018. So you will have to clear your position on or before 29th Nov 2018. If you are not doing so, then exchange will do it then exchange will settle at settlement price.

Now I hope that Stock Future trading concept is clear to you. If you want to share your view with us or having any kind of query and want to ask any question then you can post it here, as soon as possible, you will get the reply.You can directly write to us to email id "stocknifty@yahoo.com" or call at +919981722011.