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What is Futures Trading

Writer
Nidhi Thakur
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August 4, 2025
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Quick Takeaways

  • Futures trading allows investors to buy/sell assets at a future date.
  • It's widely used for hedging and speculation.
  • Indian exchanges like NSE, BSE, NCDEX and MCX offer futures trading on indices, equities, commodities, and currencies.
  • Risks include high volatility and leverage.
  • Trusted brokers like Swastika Investmart offer guided onboarding and research tools.

🧠 The Ultimate Guide to Futures Trading in India

What is Futures Trading?

Futures trading involves a legal contract to buy or sell an asset at a predetermined price at a future date. It is used extensively across financial markets—be it equities, commodities, or currencies.

In India, futures contracts are available for:

  • Stocks & Indices (Nifty 50, Bank Nifty, Midcap Nifty, Sensex, Bankex, FinNifty)

  • Commodities (Gold, Crude Oil, Silver)

  • Currencies (USD-INR, EUR-INR)

💡 Example: A trader expecting crude oil prices to rise buys a futures contract. If the price increases by expiry, they profit.

Why Do Investors Use Futures Contracts?

1. Hedging Against Price Movements

Futures are often used to protect portfolios from adverse price changes.

Example: A farmer locks in the price of wheat by selling wheat futures on NCDEX, protecting against post-harvest price drops.

2. Speculative Opportunities

Retail traders speculate on price movements to make profits in short durations.

Example: Intraday traders frequently use Bank Nifty futures for margin-based trading.

3. Leverage for Higher Exposure

Futures contracts require only a margin deposit, offering exposure to a much larger position.

⚠️ Note: Leverage can amplify both profits and losses.

Where Can You Trade Futures in India?

  • NSE (National Stock Exchange) – equity & currency futures

  • MCX (Multi Commodity Exchange) – commodity futures (gold, oil, etc.)

  • BSE (Bombay Stock Exchange) – equity derivatives

To start trading, you need a demat + trading account and F&O activation with a SEBI-registered broker.

How Does a Futures Contract Work?

Term Explanation

Lot Size

Minimum quantity to trade (e.g., 75 units in Nifty)

Expiry Date

When the contract settles (last Thursday of each month)

Mark to Market

Daily profit/loss adjusted in your margin account

Margin

Initial deposit required (varies from 10–30%)

Real-Life Example of a Futures Trade

Let’s say you expect Reliance Industries to rise in price.

  • Current Reliance Futures Price = ₹2,500

  • Lot Size = 250 shares

  • Margin Required = ₹1,25,000 (approx)

If it goes up to ₹2,600:

  • Profit = ₹100 x 250 = ₹25,000

If it falls to ₹2,400:

  • Loss = ₹100 x 250 = ₹25,000

As you can see, volatility and timing are crucial.

Key Risks in Futures Trading

  • High Volatility: Prices can change rapidly.

  • Margin Calls: If price goes against you, you must maintain margin.

  • Expiry Risk: Contracts expire; rollover may incur costs.

  • Lack of Liquidity in niche contracts can affect exits.

Always evaluate your risk tolerance before entering the F&O segment.

Futures Trading vs Options Trading

Feature Feature Options

Obligation

Yes (buyer & seller)

Only seller is obligated

Premium Cost

No

Yes

Leverage

High

Moderate to High

Risk

Unlimited

Limited for buyer, unlimited for se ller

How Swastika Investmart Can Help You Trade Smarter

Swastika Investmart, a SEBI-registered and NSDL/ CDSL-compliant broker, offers:

  • Simplified onboarding for F&O traders

  • Free research reports on equity and commodities

  • Risk profiling tools and trader education

  • User-friendly platforms for mobile and web trading

✅ With over 30 years of trust and strong regulatory compliance, Swastika helps retail investors and HNIs confidently navigate the futures market.

FAQs About Futures Trading

Q1. Is futures trading allowed for retail investors in India?

Yes, through SEBI-approved brokers with activated F&O segments.

Q2. Is it mandatory to hold till expiry?

No, you can exit anytime before expiry.

Q3. Are futures risky?

Yes, due to leverage and market volatility. Beginners should start small or use demo accounts.

Q4. What’s the minimum capital needed?

Varies by contract. Some futures require just ₹25,000–₹1,00,000 as margin.

Q5. Can I do futures trading via mobile apps?

Absolutely. Brokers like Swastika, Zerodha, and Angel One provide mobile platforms.

🏁 Conclusion

Futures trading can be a powerful tool when used with knowledge and discipline. Whether you're a hedger or a speculator, understanding how these contracts work—and being aware of the risks—is essential.

If you’re ready to explore futures trading, Swastika Investmart offers all the tools, research, and support you need to trade confidently in India’s dynamic financial markets.

👉 Start your F&O journey with Swastika – Where trust meets technology.

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