Futures Trading for Beginners | Learn Basics & Start Trading
INTRODUCTION
You have heard about the stock market now and you also do not want to trade in the stock market? Futures trading is a powerful tool with which you can earn profit if you have the right knowledge and strategy. This article is a step-by-step guide for futures trading for beginners, in which you will get everything from basics to practical tips. Understand the article and see how future trading is done
What is Futures Trading?
Futures trading is a contract in which you agree to buy or sell an asset (such as stocks, commodities, indices or crypto) at a fixed price on a future date.
Example:
You think that Reliance's stock will increase after 1 month. So you can buy its futures contract at today's price. If the price increases, you make a profit.
Bonus example:
You go to the market and you buy apple juice and the price of that juice is 30 rupees and in future if the price of apple increases then the price of that juice also increases. Now let's understand this example in detail in the complete article.
Features of Futures Contract:
Standardized Contract:
Quantity and expiry are fixed.
Exchange Traded:
Traded on official exchange like NSE or BSE.
Margin Requirement:
Full money does not have to be paid, only a few percent margin is required.
Leverage:
Big trade is possible with less capital.
How does Futures Trading work?
1. Buyer and seller both enter into the contract.
2. Trade settlement takes place on the future date (Expiry).
3. Profit or loss is made according to price movement.
Example:
You bought Bank Nifty futures at 46,000.
On the day of expiry its price was 46,800.
Your profit = 800 points × lot size.
Key Terms in Futures Trading
Spot Price:
Current market price of the asset.
Futures Price:
Agreed price for future.
Lot Size:
Minimum quantity to trade.
Margin:
Initial deposit to enter trade.
Leverage:
Multiply buying power.
Mark-to-Market:
Daily profit/loss settlement.
Expiry Date:
Contract end date.
Types of Futures Trading
Stock Futures:
Jaise Reliance, TCS, HDFC Bank.
Index Futures:
Jaise Nifty 50, Bank Nifty.
Commodity Futures:
Gold, Silver, Crude Oil.
Currency Futures:
USD/INR, EUR/INR.
Pros & Cons of Futures Trading
Pros:
High profit potential
useful for hedging
Short selling allowed
benefit of leverage
Cons:
High risk due to leverage
Daily margin requirement
Complex for beginners
Fast losses possible
How to start Futures Trading? (Step-by-Step)
1. Choose Right Broker:
SEBI registered broker in which futures trading is done.
2. Open a trading account:
A special account is required for futures.
3. Gain basic knowledge:
Understand terms, charts and analysis.
4. Start with demo or small capital:
Practice is necessary first.
5. Make a Risk Management strategy:
Fix stop loss in every trade.
This guide is helpful for beginners:
What is the difference in trading and investing READ MORE
Real meaning of Margin and Leverage
If the price of a contract is ₹1,00,000, then you may have to give only ₹20,000 in margin. This means that you can do a trade of ₹1L in ₹20k.
This is leverage - in which you can earn big profit with less capital. But the loss can also be big with the same leverage.
Best Futures Contracts for Beginner Traders
Some common and liquid contracts in India are ideal for beginners:
Nifty Futures
Bank Nifty Futures
Reliance Futures
Infosys Futures
Gold Futures (MCX)
These contracts provide more volume and liquidity, making entry-exit easier.
Futures Trading Strategies for Beginners
1. Trend Following:
Trading with price momentum.
2. Breakout Trading:
Support or resistance break on entry.
3. Scalping:
Quick small profits in intraday moves.
4. Hedging:
Opposite trade to cover losses.
How to manage risk in futures trading?
Fix Stop Loss:
Set maximum loss limit in every trade.
Control Position Size:
Risk a small % of capital.
Avoid overtrading:
It is wrong to do too many trades.
Avoid Emotional Trading:
Fear and greed both cause loss.
What is the difference between Futures and Options?
In Futures there is obligation to complete the trade.
In Options there is right, not obligation.
Futures are more risky for beginners.
For the basics of options trading, we can also upload a detailed post on Bullish Run in future.
Real-Life Example: Nifty Futures Trade
Nifty Futures Price: ₹22,000
Lot Size: 50
You buy 1 lot = ₹22,000 × 50 = ₹11,00,000
Margin: 20% = ₹2,20,000
Price rises to ₹22,300
Profit: 300 × 50 = ₹15,000
Common Mistakes Beginners Make
Without learning how to trade with real money
Apply no stop loss
wrong use of leverage
overconfidence
Taking trade based on tips and news
Best Tools for Futures Trading
Charting Platforms:
TradingView, Zerodha Kite
News Portals:
Moneycontrol, Economic Times
Broker Reports:
Daily technical analysis
Option Chain + Futures Data: NSE website
What is the Ideal Timeframe for Futures Trading?
Intraday Trading:
Close position on the same day
Swing Trading:
Holding for 2–10 days
Positional Trading:
View up to 1 month
Swing trading is best for beginners because the risk is low and the stress is also a little low.
Can I earn monthly income from futures trading?
Yes, but you need:
Consistent strategy
Proper capital and risk management
Emotional control
Many people lose money in the pursuit of quick money.
Conclusion:
If you are new to the market, futures trading can be a good learning experience but it also involves high risk. You have to work with patience, discipline, and practice. Keep working on consistency
It is possible to take a big position in futures trading with less capital, but it is wrong to enter without understanding the risk.
So are you ready to start futures trading now? First practice the demo, understand the basics of the market, and grow step-by-step
If you want more beginner-friendly content, keep visiting Bullish Run.
