Derivative trading is quite complex to understand and it has four different ways
In derivatives stocks are mandatory to be bought or sold in lots which vary from one stock to another and prices of those lots are derived by multiplying current market price of the stock by their numbers. In derivatives, the investor can buy the lots by investing 30 to 40% of the total stocks value. The investor can gain by short selling the stocks as well that means he can first sell the stocks at higher price and then make profit by getting the stocks at lower price. Also the brokerage in derivative segment is lower than cash segment when compared to the invested amount and the number of stocks you hold.
Derivative segment require very good calculations and quick decision making so very few people are doing this trading properly and rest bear losses and usually quit instead of learning.
- Future
- Forward
- Options
- Swaps
In derivatives stocks are mandatory to be bought or sold in lots which vary from one stock to another and prices of those lots are derived by multiplying current market price of the stock by their numbers. In derivatives, the investor can buy the lots by investing 30 to 40% of the total stocks value. The investor can gain by short selling the stocks as well that means he can first sell the stocks at higher price and then make profit by getting the stocks at lower price. Also the brokerage in derivative segment is lower than cash segment when compared to the invested amount and the number of stocks you hold.
Derivative segment require very good calculations and quick decision making so very few people are doing this trading properly and rest bear losses and usually quit instead of learning.
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