Derivative trading

Hi folks.

Am absolutely new to derivateives trading, and wish to know about how it is done, what things to look out for etc.

Basically everything that a person should know before trading in them.
As of now I have had experience only in equity trading.
Please help

BTW I am aware of derivatives and what they are and how they operate.

*bump*

If you are interested in trading in derivatives i think the best start would be to trade in Nifty Futures. You can get the details of nifty future contract from the NSE website. Whatever strategy that you use for trading in equities can very well be applied to Nifty as well. I prsonally prefer to trade with the trend which is always the safe bet.
Let me know if you have some specific questions.

Ok for starters - usually how much is the margin usually required in derivatives?

Suppose I got 50K in my trading a/c. How much worth can I trade?

You would require aprrox 40k for one nifty future lot.

Why dont they have smaller lots?

Previously the lot size of Nifty was 200. Now it has been reduced to 100, so that trader with less capital can trade.

It is a High risk -High gain game and requires a lot of experience & study, that's why the margin money is kept more so that new people should not get trapped in this.

So, first learn & the experience
Happy trading

Well trading is a business in which the raw matrial itself is money. You have less money you 'll make less money and it will become a zero sum game.
Dont get me wrong. I ll give you one scenario where even with one lot you might need much more than 40k.
Suppose you bought nifty at 3800 level and it goes down. Your SL gets triggered and you incurred a loss of 3k. You take another position..this time short at 3750 and nifty goes up and again loss of 5k. On a bad day it is very much possible that you incurr such losses. If you have just 40k then you dont have any cushion.
I would recommend that you should atleast have 1 lakh if you want to trade with 1 lot of nifty.

NSE should now introduce something like the S&P 5OO emini futures in the U.S., the lot size will be smaller and will attract many people. I am not sure when the 'babus' in NSE will understand all this... anyway let us hope!

Sunil Saranjame.