Futures basic help...please

Hello all

I am new here and want to know from seniors regarding my knowledge of FUTURE TRADING. I would appreciate even a little help.

CASE -- i want to buy a future of XYZ company which is trading at Rs. 99 while its future comes at Rs. 100 and the lot size is 100.

So it means that one lot would cost Rs 10000. And it would come to me at 15-20 % , lets assume 20% .

So now, 20% means Rs. 2000. My question is who pays this margin. Is it my broker or its actually me. Do brokers provide margin on futures buying. If yes, Do they charge some interest on this money (here Rs. 2000).

Lets assume i have more than Rs. 2000 in my account. Now, is it necessary to take margin from broker even if i could afford Rs. 2000?? I want to remain independent from broker, is it possible?

Now, lets assume that my expiry of lot has reached. If the market price is less than Rs. 100..say Rs. 90 , it means I'm in loss. Now, IS IT MY LIABILITY TO SELL THE LOT EVEN IF I'M LOSING?. Is it possible to forget about the future lot if I'm not making any money from it , so in that case i would lose only my margin money which i invested at the time of buying the future lot?.

Or it is my liability to sell the lot even if i am not making any money through it?

And when is the margin money deducted from my account. At the expiry date or at the time of buying future lot?

CASE 2 - if the price reached Rs 110 on (or before) expiry date and i am selling, it comes out to be 110*100 = Rs. 11000

now i would make a profit of 11000-10000= Rs. 1000 i e my initial margin would be adjusted in the final sell. right ??

Some people were saying in the forum that the broker freezes the margin money in account during buying of futures. what does it mean. Whose money?? mine or broker , if it's mine how's the broker providing the margin money on his behalf??

I might sound very strange but i am very new and know nobody in person who could explain me all these things except you guys . so please help me . thanks in advance

I still hope that someone would help me

As far as my knowledge, you have to pay margin and broker will not pay it.
If broker provides margin, he will charge interest if the trade is positional, I don't think he will charge you for intraday.

If you can afford it is not necessary or compulsory to take margin from broker as per my experience.

Actually my broker does not provide margin, in my case if I don't have sufficient margin I simply can not trade, the order will be rejected.

thank you

But please tell me..Are futures liable on a person?? Would i need to execute it necessarily ???

Anyone ..Please clear my doubts which i posted in first message here....PLease :thumb:

otherwise i could never trade futures

1. You have to have adequate margin to trade in futures.
2. You have to have an initial margin to open a position(ie to buy or sell a future)
3. This can be done by pledging existing shares as well with some brokers who allow you to trade based on this.
4. You also need to have margins to support your position-- if the trade is in loss the next day you will have to pay out additional margin and on days the position is in profit your account will be credited on that day. But only on expiry or if you close the position , the actual loos or profit is calculated and accordingly the money is in your account or transferred out of your account.
5. But you have to do extensive reading before you trade as it is a leverage game and losses can be huge if you do not have a startegy like stop loss on when to get out and know exactly what profit to expect , so that when the position is in profits you take them instead of allowing it to become a loss.
6. This is just some basic stuff. Make sure to meet some broker and really understand what future trading is all about.

Brokers do provide margines for Futures trading but against Specifies Securites/Stocks and as the value of the Stocks on which Margine is provided fluctuate , you must make good the fall if any in the value. Some hair cut in stock's value is applied at reaching the amount one is allowed as margine!
One cannot expect the broker to provide margine for you to trade without any security and moreover that would be against the SEBI guidelines too!!
Margine is to be paid upfront... your account is debited the moemnt you take position in a Future contract and EOD you must pay or receive the MtoM !
The future lot shall cease to exist after the Expiry date... you must pay the difference in cash on settlement day! If you wish to continue to hold the Futures of the same stock you must Buy again a contract for next month.

It has to be your money that is at stake and never ever would a Broker risk his money!