What is Futures Trading in India?

Future trading is a revolution of the trading system that brings many changes in the world of stock trading. At that time, conventional trading only knew the cash system which had limitations in terms of margin & time. But with the futures trading system, transactions can take place for new transactions carried out later. If you want to learn Futures Trading in India then you should read this guide

Basics of Futures Trading

Besides in the world of stock trading & Options Trading, futures trading is also known in the world of commodity markets. In the commodity market, investors can speculate on commodity prices in the future whether it is predicted to increase or decrease. Besides agricultural commodities, it also includes commodities from mining products such as petroleum, iron/metal and gold.

History of Futures Trading

The history of the future trading began in the early 17th century when a futures trading exchange namely the Dojima Rice Exchange, established in 1710 in Japan for the purpose of trading rice futures.

In the 16th century, Western Future Market started operating in England. But A central dealing facility wasn’t opened till 1877.

Finally, an official commodity trading Exchange the London Metals and Market Exchange was established in England in 1878. Where farmers and dealers were able to agree to trade in commodities that could be exchanged later on. For example, a farmer can agree to receive a payment of US $ 5,000 currently paid for agricultural commodities that will be handed over to buyers in the future.

Futures Trading Advantages

Here are the benefits of futures Trading:

1. Highly Leveraged

Future trading is a high lever for investment because in future trading transactions it is possible for investors to set aside the value of a futures contract in a small part (minimum 10%) of the value of the commodity in a contract referred to as “margin”. If the investor predictions that the commodity purchased has increased the investor’s profit will double by 10 times the profit that has been set aside in the form of a margin future contract.

When purchasing a futures contract, you’ll have to give a sort of upfront premium, generally adding up to 10 percent of the full estimation of the agreement, however close to that. This implies you’ll have the option to open yourself to resources in a far more prominent incentive than what you’re really giving yourself. This is beneficial, in light of the fact that you might exchange Rs.1,00,000 of stock or ware by putting just Rs 10,000 down — as long as you secure your trade with an integral agreement. 

2. No Physical Storage of Commodity

Speculation made through future trading can be interpreted as a paper investment because investors are not bothered with real commodities that must be saved. Investors only have proof of commodity ownership in a future contract.

3. Higher Profits over Cash Market

Investors can get profits quickly because they can get a profit 10 times the contract value. In addition, the future market can move faster than the cash market (cash market).

4. No Insider Trading

Future trading is a very fair market compared to the stock market because in futures trading it is very difficult to get the inside information so that the possibility of insider trading in futures trading is small.

5. High Liquidity

Most future markets are more liquid because lots of contracts are traded every day. The commission charged is very small when compared to the value of investing in futures trading.

Future contracts are commonly profoundly fluid assets. There’s no restriction on the number of Future contracts order in a day. Financial specialists make money in Futures contracts at a very high rate. In case you’re keen on day trading, this is probably the best spot to work. In case you’re anxious about the legally binding commitments of Future trading, attempt it for yourself — you’ll perceive that it is so natural to get new agreements and oversee them. This is why future trade is favorable in India.

6. Short-selling

In case you’re keen on the quick pace and conceivably exceptional yields of short-selling, Future Trading is the spot to do it. On the off chance that you think a specific market is going to plunge, you can put your cash in a sell contract for that benefit, in light of a course of events you get profit. 

7. Diminished Commission Expenses

Future Contracts will expect you to pay a commission rate, yet they’re by and large lower than those you’d find trading stocks and securities. In case you’re day trading with stocks and securities, those commission charges can rise rapidly, so future contracts speak to a chance to accomplish all the more trading for less brokerage. 

What makes Futures Trading Favourable in India?

Future Trades are an alternate sort of venture than stocks, securities, or common assets, giving you another kind of advantage you can use to broaden your possessions. In case you’re worried about the unpredictability of a particular stock, you could put money into a futures contract that shields you from a price drop by allowing to sell a bit at a predefined cost later on. 

Would it be a good idea to Invest in Futures? 

Future Trading is somewhat harder to learn than trading stocks or bonds, yet it’s a lot less difficult than a great many people figure it out. It’s a genuinely solid kind of speculation that can yield possibly exceptional yields — and guard your cash simultaneously. Hence, it’s a decent expansion to your portfolio, if for no other explanation than to enhance it. 

That being stated, each financial specialist is distinctive with various objectives, various needs, and various inclinations. Invest some energy finding out about future trading, and on the off chance that it seems like it accommodates your methodology, get yourself included.


All you need to do is signup with one of the great platform in India that provide Futures Trading platform. In that way, you can start practicing and learn more about how to speculate for the future value of a commodity. Before long, you will be able to gain profit by yourself.

Good luck and happy Trading!

Zelman Yakubov

About the author

Hi, I am Zelman Yakubov, an expert stock market trader. My goal is to educate and mentor people that wants to learn the financial trading markets. In my free time I love to go out for various different entertainment and try new restaurants.

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