Forex Digest

I want to trade both stocks options and future options at the lowest online price using one account.

http://individuals.interactivebrokers.co m/en/main.php

not sure if they are the best but they do it, you will need to look at your goals to see who is the best for you.

2007-10-10 13:25:18 by Dianna N

www.eminiaddict.com I focus on utilizing cutting edge trading strategies to give me an edge over other market participants. My main focus is on ...

There is different lot size for the different company and also the margin require to buy a lot. How it is calculated?

pls clik on-
http://www.nseindia.com/



Selection Criteria
Eligibility Criteria for selection of Securities and Indices

The eligibility of a stock / index for trading in Derivatives segment is based upon the criteria laid down by SEBI through various circulars issued from time to time. The latest circular issued in this respect is circular No. : SEBI/DNPD/Cir-31/2006 dated September 22, 2006.

Based on various circulars, the following criteria will be adopted by the Exchange w.e.f September 22, 2006, for selecting stocks and indices on which Futures & Options contracts would be introduced.

1. Eligibility criteria of stocks

* The stock shall be chosen from amongst the top 500 stocks in terms of average daily market capitalisation and average daily traded value in the previous six months on a rolling basis.


* The stock’s median quarter-sigma order size over the last six months shall be not less than Rs. 0.10 million (Rs. 1 lac). For this purpose, a stock’s quarter-sigma order size shall mean the order size (in value terms) required to cause a change in the stock price equal to one-quarter of a standard deviation.


* The market wide position limit in the stock shall not be less than Rs. 500 million (Rs. 50 crores). The market wide position limit (number of shares) shall be valued taking the closing prices of stocks in the underlying cash market on the date of expiry of contract in the month. The market wide position limit of open position (in terms of the number of underlying stock) on futures and option contracts on a particular underlying stock shall be 20% of the number of shares held by non-promoters in the relevant underlying security i.e. free-float holding.



2. Continued Eligibility

* For an existing stock to become ineligible, the criteria for market wide position limit shall be relaxed upto 10% of the criteria applicable for the stock to become eligible for derivatives trading. To be dropped out of Derivatives segment, the stock will have to fail the relaxed criteria for 3 consecutive months.


* If an existing security fails to meet the eligibility criteria for three months consecutively, then no fresh month contract shall be issued on that security.


* Further, the members may also refer to circular no. NSCC/F&O/C&S/365 dated August 26, 2004, issued by NSCCL regarding Market Wide Position Limit, wherein it is clarified that a stock which has remained subject to a ban on new position for a significant part of the month consistently for three months, shall be phased out from trading in the F&O segment.


However, the existing unexpired contracts may be permitted to trade till expiry and new strikes may also be introduced in the existing contract months.


3. Re-introduction of dropped stocks

A stock which is dropped from derivatives trading may become eligible once again. In such instances, the stock is required to fulfill the eligibility criteria for three consecutive months to be re-introduced for derivatives trading.


4. Eligibility criteria of Indices

* Futures & Options contracts on an index can be introduced only if 80% of the index constituents are individually eligible for derivatives trading. However, no single ineligible stock in the index shall have a weightage of more than 5% in the index. The index on which futures and options contracts are permitted shall be required to comply with the eligibility criteria on a continuous basis.


* SEBI has subsequently modified the above criteria, vide its clarification issued to the Exchange “The Exchange may consider introducing derivative contracts on an index if the stocks contributing to 80% weightage of the index are individually eligible for derivative trading. However, no single ineligible stocks in the index shall have a weightage of more than 5% in the index.”


* The above criteria is applied every month, if the index fails to meet the eligibility criteria for three months consecutively, then no fresh month contract shall be issued on that index, However, the existing unexpired contacts shall be permitted to trade till expiry and new strikes may also be introduced in the existing contracts.



The following procedure is adopted for calculating the Quarter Sigma Order Size :

1. The applicable VAR (Value at Risk) is calculated for each security based on the J.R. Varma Committee guidelines. (The formula suggested by J. R. Varma for computation of VAR for margin calculation is statistically known as ‘Exponentially weighted moving average (EWMA)’ method. In comparison to the traditional method, EWMA has the advantage of giving more weight to the recent price movements and less weight to the historical price movements.)


2. Such computed VAR is a value (like 0.03), which is also called standard deviation or Sigma. (The meaning of this figure is that the security has the probability to move 3% to the lower side or 3% to the upper

2008-09-30 08:03:26 by amit

simple gambling in future trading makes severe woundings to the middle class dreamers.

stock market itself is gambling, y futures alone.

futures & options are for balancing the share prices and somany things are there.

f&o is necessary for a matured market.

middle class dreamers are coming to play with out knowing the rules and game. so definitely they go with wounds.

2008-11-04 07:34:56 by RAVEEN43

Stock trading is trading an equity interest in a company.

Trading in commodities futures is trading in the price risk for particular commodities. If you go long or short, you are buying the right to participate in the price movement of the underlying commodity in contract quantities, for a particular period of time.

The other difference is that trading in stocks is typically a cash transaction; i.e., if you buy $10,000 in stock, you put up $10,000 to do so. Futures contracts only require small margin capital in order to participate. For instance, to buy the right to participate in 500 barrels of crude oil, you only need to put up $4000 for a contract worth $55,000. That is enormous leverage and can lead to significant one-day gains or losses on a relatively small capital base. Hence, you cannot trade commodities like stocks - you can't buy and hold. And futures settle daily, so every loss or gain you experience is deposited or withdrawn in cold cash from your account every night.

2008-03-16 07:34:17 by DY

With:
> Fundamental and Technical analysis?
> Short, Medium & Long term prediction?
> For market in US (Dow Jones & Nasdaq) and
Asia (Hangseng, Nikkei, Kospi)?

I would appreciate for your detail answer... thx.

Hi John,

It is a common misconception that anyone can "predict" stock or stock index prices. You can only determine the "fair value" of a stock or a stock index and compare it to other trading instruments. Using this approach you could determine stocks that are rather "cheap" when compared to others. But as you can imagine, many times there's a reason WHY this particular stock is rather cheap.

Unfortunately these days it is almost impossible to factor in all the fundamental data that is available. Therefore your best bet is technical analysis.

Stock trading is not as difficult as many people think. Following three basic rules for stock trading success can greatly simplify trading and increase your chances of making money in the markets.

Many people tend to believe that stock trading is difficult, time-consuming and risky. Following three basic rules for stock trading success can greatly simplify trading and increase your chances of making money in the markets.

The first rule dictates to only buy a stock that is moving up and don't hold a stock while it is moving sideways or going down. The rationale behind this rule is that it is much easier to take advantage of the momentum of a stock in a uptrend than trying to pick bottoms or tops. Many traders tried to pick bottoms and failed. The most successful traders are waiting for a confirmed uptrend before buying a stock. You just have to make sure that you identify the trend early and don't wait too long, since in the past couple of years uptrends were short-lived.

The second rule states that a trader should always know when to exit. This rules applies to both possible outcomes of a trade: A trader should determine a so-called "stop loss", which is either expressed in a percentage of the price or a fixed dollar amount. If the stock moves down, the trader sells the stock at the predefined stop loss point and therefore limits his losses to the predefined dollar amount. Most traders like to apply a stop loss of 2% - 10% of the capital invested in a stock. The same applies for a so-called profit target: Successful traders know when to exit a trade with a profit, since there is no guarantee that the stock price will rise forever. A typical profit target is 5% - 15%.

The third rule is about picking the right stock and is tight into the first and second rule. A trader should always be looking for stocks that just started an uptrend and are likely to maintain the momentum. If the expected uptrend does not happen, the trader liquidates his position and moves to the next stock. Private traders can adjust their portfolios faster than money managers, since private portfolios are usually smaller. Therefore the private trader definitely has an advantage and has the potential to outperform the performance of traditional mutual funds, if he applies the right trading strategies.

Hope that helps.

2007-05-15 10:25:01 by John