Cash Market or Derivatives : Which is Better ?

Everyone enters the market with only one objective, i.e, to make the profit. But we should keep in mind that there are a lot of corporate, experienced and professionals are dealing with cash market for a long time, and are equipped with enhanced tools. We still hope to beat them without knowing the actual capabilities. Which may result in a loss. We must ensure first that we are ready to enter the market with proper planning and assistance.

There are two types of market:

1.Cash Market

2.Derivative Market

Securities and commodities like shares and bonds, metals, etc are traded for immediate delivery. There are 2 sections in this market; debt and equities. The cash market is regulated by SEBI. One can trade in the cash market through BSE, NSE, Commodity Exchange or a Foreign Exchange Market. It’s a place where the buying and selling of commodities are mutual and is undertaken by the government, the general public, other companies, etc. Daily buying and selling in the market is a risky task, because of it's unpredictable nature. The price of shares varies moment by moment.

Derivatives derive their values from an underlying contract. These could be stocks, commodities etc. They help you to gain profit by estimating the future value of the underlying assets. Therefore, their value is derived and they are termed as derivative.

The trading can be done in derivatives by following two means, Future, and Options.

Futures contracts represent an agreement to buy or sell at a specified time in the future for a specified amount. For example, you cannot buy a contract for a single share in the derivative market. It is always bought as a lot with a certain expiry date. This does not hold true for future contracts. You can check best stock future tips for more information on futures.

Options are quite similar to futures. However, there is one key difference. If you hold an option contract to buy 100 shares by the expiry date, you are not required to hold the terms of the agreement.

It doesn't matter where you trade, the rate of risk is quite same in every division. But you can always make the risk probability least just by getting proper knowledge, assistance, guidance and better decision making. And if you trade in intraday in option and future segment, then you must check out best intraday tips providers in India for better assistance.