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Futures Terminologies

Let us know about some terminologies used while trading in futures. As per the stock tips experts there are numerous rounds of words in future trading, let us know about commonly used words.1. SPOT PRICE: The price at which an asset trades in the spot market.2. FUTURES PRICE: The price at which the futures contract trades in the futures market.3. CONTRACT CYCLE: The period over which a contract trades. The index futures contracts on the NSE have one month, two months and three months expiry cycles that expires on the last Thursday of the month. Thus a contract which is to expire in January will expire on the last Thursday of January.4. CONTRACT SIZE: It is the size of the lots that have to be delivered under one contract. For instance, the contract size on NSE’s futures market is 200 Nifties. MCX commodity tips providers suggest the contract according to your investments.5. BASIS: In the context of financial futures, the basis can be defined as the futures price minus the spot price. Each delivery month has a different basis, for each contract. The basis will be positive, in normal markets; which shows that the futures price exceeds the spot prices.6. INITIAL MARGIN: The amount that must be deposited in the margin account at the time when a futures contract is first entered into is known as initial margin.

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