Trading

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Here’s How Arbitrage Trading Works

Every day, thousands of traders and investors participate in the capital markets. All of the participants' primary goal is to make a profit. To trade in the stock market, you can use a variety of techniques and strategies. A trading strategy, on the other hand, becomes applicable only if the asset's price moves in a favourable direction. Arbitrage is a unique but simple method of profiting from the capital markets. Before we get into arbitrage trading… To do any form of trading, you need a reliable brokerage trading firm that gives you thebest stock trading platform that helps you analyse the right trading opportunities. Zebu gives you one of the best online trading platforms in the country with a fast-growing customer base. Please get in touch with us to know more. What exactly is arbitrage? To understand how arbitrage works, it is essential to first define arbitrage. Arbitrage is defined as the simultaneous purchase and sale of the same asset in different markets in order to profit from the price difference in both markets. While arbitrage opportunities can arise in any asset class that is traded in different markets in a standardised form, currency and stock markets are the most common. Arbitrage opportunities are frequently fleeting, lasting only seconds or minutes. Contrary to popular belief, markets are not completely efficient, creating arbitrage opportunities. As you may know, the price of an asset is determined by the supply and demand for it. A price difference arises as a result of a difference in supply and demand for an asset in different markets, which can be used for arbitrage trading. What is the process of arbitrage trading? As mentioned earlier, arbitrage trading is based on the trader's ability to capitalise on the price gap of the same asset in different markets. Because arbitrage opportunities are limited, most traders use algorithms to execute arbitrage trades. Let us look at a stock market example to see how arbitrage works. Assume XYZ is a stock that is traded on the National Stock Exchange and the New York Stock Exchange. On the NYSE, the price of XYZ is quoted in US dollars, while on the NSE, it is quoted in Indian rupees. On the NYSE, the share price of XYZ is $4. The share price on the NSE is Rs 238. If the USD/INR exchange rate is Rs 60, the NYSE share price of XYZ in INR will be Rs 240. If the USD is converted to INR, the same stock is quoted at Rs 238 on the NSE and Rs 240 on the NYSE. To take advantage of the arbitrage opportunity, a trader will purchase XYZ shares on the NSE at Rs 238 per share and sell the same number of shares on the NYSE for Rs 240, earning a profit of Rs 2 per share. While participating in arbitrage trades, traders must consider certain risks. The price difference is the result of a favourable exchange rate, which is constantly changing. Any significant change in the exchange rate while the trade is being carried out can result in losses. The transaction fees are another important factor to consider. If the transaction cost exceeds Rs 2 per share, the price gain will be lost. In India, how does arbitrage work? There is a scarcity of companies that are listed on both the Indian and foreign stock exchanges. However, India has two major exchanges—the BSE and the NSE—and the majority of companies are listed on both, creating an opportunity for arbitrage. Even if the price of a particular share differs between the NSE and the BSE, an arbitrage trade cannot be conducted. On the same day, traders are not permitted to buy and sell the same stock on different exchanges. For example, if you buy XYZ shares on the NSE today, you cannot sell them on the BSE the same day. So, how exactly does arbitrage work? One can sell shares that he or she already owns on one exchange and buy the same amount on another. For example, if you already own XYZ shares, you can sell them on the BSE and purchase them on the NSE. If you already own the stock, you are not engaging in an intraday trade on different exchanges, which is not permitted. Conclusion Because the price differential does not last long, automated systems are commonly used for arbitrage trading. Though spotting arbitrage opportunities is simple, profiting from them manually is extremely difficult. As we mentioned earlier, arbitrage trading needs the best online trading platform for you to instantly capitalise on any price difference between NSE and BSE. Zebull from Zebu is the fastest growing and best stock trading platform that comes with a mind-boggling number of features to help traders. Zebu is also becoming the fastest-growing brokerage firm in the country - please get in touch with us to know more about our products and services.

A Quick Guide To Price Action Trading

Price action is the study of market price movement. Why not examine, analyse, and learn from the price itself? The price shown on a chart is based on the combined beliefs, knowledge, and actions of market participants. Buyers are in charge if prices rise. Prices falling suggests sellers are in command. In a sideways market, buyers and sellers cannot agree. Also, price action traders ignore fundamental events, believing the markets already know about them. For them, price movement is the best indicator. Price action is employed by everyone from ordinary investors to floor traders and even institutions. Price action is a fantastic approach to look at markets. Many believe that prices move based on public opinion. Because people can have opposing views while trading in the same market. There are two types of traders: those that buy an instrument when the price is approaching a resistance level, and those who wait to see if the price bounces off or breaks through. In any case, both traders appear to be wrong since they lack market knowledge and appear to be following the crowd. The financial markets are fundamentally unpredictable, making future price movements impossible to predict. Trading price action strategies requires the best Indian trading platform with a wide range of features. With Zebu, one of the best stock brokers in the country, your online stock trading journey will be drastically enha How to trade with price action Many price action trading methods use a two-step procedure to discover and exploit market trading opportunities. Find out what's going on now. As previously stated, a market can go up, down, or sideways. Looking at the prices of various assets should reveal the market's movement. Find the optimal trading moment. After determining the current market conditions, a trader looks for a profitable trading opportunity. If prices are rising, the price action should indicate whether prices will continue to rise or if a correction is imminent. For example, consider a price action trade in Reliance. Assume that INR 2,500 is a resistance. A price-action trader would wait for a break of INR 2,500 to buy Reliance. If it breaks out above INR 2,500, the stop loss would be below the previous support of INR 2,400. Most price action traders enjoy candlestick charts because they are informative and visually appealing. A candlestick shows the high, low, opening, and closing prices of an asset through time. A candle that closes higher than its initial price is green (bullish), while one that closes lower is red (bearish). By closely examining the prices, a price action trader can learn a lot about how the market operates. The size and information provided by a candle are determined by the pricing points used to create it. As a result, some candle types display bullish hammer, bearish hanging man, and neutral Doji. As time passes, a chart shows more and more candlesticks. When candlestick patterns appear on a chart, they reveal more price data. When employed correctly, candlestick patterns can show traders how the market moves like "confirmation, reversal, or neutral." In any case, there are patterns that imply the dominating tendency will continue. Head and shoulders and double bottoms are reversal patterns that indicate the current trend is poised to reverse. Neutral patterns, like symmetrical triangles, can occur in any market and, while they indicate a major shift, they provide no direction. It's more important to understand what they say than how they were made. Price action traders can utilise trendlines to find the right entry and exit. Price Action Patterns In price action tactics, you can find out what individuals are thinking by watching price fluctuations. These are some of the market's most reliable price action setups. A long wick A candle has a body and wick(s). This is the distance between the opening and closing prices (the high and the low). Long wick candles are prized by price action traders because they reveal price movement. During that period, buyers tried to drive prices up, but sellers fought back, bringing prices back to where they started the day. A price action trader can now either back the sellers or wait for more proof. No matter how they seem, long wick candles are vital to price action traders. Inside bar Traders wonder if breakouts are legitimate when they occur. The term "within" refers to when one or more candles trade inside the major breakout candle's high and low positions. This is called an inside bar. If an inside bar occurs after a breakout, it is a sign of the strength of the breakout according to price action theories. Trading Trendlines Trendline trading is the use of lines to determine the ideal places to enter trades in up or down markets. In an uptrend, a trendline is projected from a swing low to a swing high. It's a "trend line." Retracements to the trend line are effective entry points. In a ranging market, horizontal trendlines might identify support and resistance zones. Essentially, price action trading can be used to locate and trade low-risk, high-reward trades. If you are a price action trader or want to get started with this concept, you need the best Indian trading platform from the best stock broker to back you up. With our state-of-the-art platform, you can take your online stock trading to the next level. To know more about our products and services, please get in touch with us.

Common Options Trading Mistakes And How To Avoid Them - Part 1

When you trade options, you can make money even if stocks go up, down, or stay the same. With options trading, you can cut losses and protect gains for only a small amount of money. Great, right? Here's the deal: When you trade options, you can lose more money than you invest in a short amount of time. This isn't the same as when you buy a stock. You can only lose what you paid for the stock in that case. With options, depending on the type of trade, it's possible to lose all of your money. That's why it's so important to be careful. Even if you're an expert trader, you can still make a mistake and lose money. When it comes to online stock trading and growing your trading account, another important aspect for you to consider is the share market brokers you trust. At Zebu, we offer the best trading platform that is packed with features that will help you make better trading decisions. To help you avoid making costly mistakes, we're going over the top 10 mistakes that new option traders make. 1. Buying OTM call options Buying out-of-the-money (OTM) call options is the biggest mistake you can make when trading options. OTM call options seem like a good place to start for new options traders because they are cheap. This may feel safe to you because it's the same thing you do as an equity trader: buy low and try to sell high. There are many ways to make money in options trading, but they are one of the most difficult. In this case, you might lose more money than you make if you only use this method. The smarter way to trade Think about selling an OTM call option on a stock that you already own as your first move. In the business world, this strategy is called a "covered call." The risk doesn't come when you sell an option when you have a stock position that covers the option. In addition, if you're willing to sell your stock if the price goes up, it could make you money. This strategy can help you get a sense of how OTM options contract prices change as the expiration date nears and the stock price changes. It's also possible to lose a lot of money by owning the stock, but that risk can be big. Even though selling the call option doesn't put your money at risk, it does limit your chances of making money, which is called "opportunity risk." You could have to sell the stock if the market rises and your call is taken. 2. Not Knowing How Leverage Works Most people who start trading don't think about how much risk they're taking when they use the leverage factor in option contracts. They like to buy short-term calls. As a result of this happening so often, it's worth asking: Is buying calls outright a risky or safe strategy? 3. The smarter way to trade A general rule for new option traders: If you usually trade 100 share lots, stick with one option at first and start with that. If you usually trade 300 shares at a time, then maybe three contracts would be a good change of pace. This is a good amount to start out with. If you don't do well with these sizes, you'll probably not do well with bigger size trades, too. This is a general rule. 4. Not having an exit plan You may have heard it before: When you trade options, like stocks, it's important to keep your emotions in check. The point isn't to be able to overcome all of your fears in a superhuman way. Having an exit plan even when things are going your way is part of this. Take the time to figure out where you want to leave and when you want to leave. If you start to worry about leaving some money on the table by getting out too early, don't worry. Remember this counterargument: What if you made more money consistently, cut down on your losses, and slept better at night? 5. The smarter way to trade Make sure you know how you'll leave a trade. Whether you are buying or selling options, having an exit plan can help you set up better trading habits and keep your fears in check. Determine how you want to get out of the situation on the upside and how much you can handle on the other side. In the event that you reach your upside goals, you should clear your position and take your money. Don't be too greedy. If you hit your stop-loss on the downside, you should clear your position again and start a new one. Don’t stay in a losing trade hoping that the prices may rise again. A lot of times, it'll be hard not to go against this way of thinking. Don't. Too many traders make a plan and then, as soon as they make a trade, ditch their plan and follow their feelings instead. Online stock trading requires you to stick to your plan and use the right market brokers to grow your trading account. At Zebu, we offer the best trading platform that is packed with features that will help you make better trading decisions. If you would like to know more, please get in touch with us now.

Common Options Trading Mistakes And How To Avoid Them - Part 2

In the previous article, we saw 3 of the most common mistakes beginner options traders can make and the smarter ways to overcome them. This article is a continuation of the list and we will cover 3 more common mistakes that can be avoided by trading smartly. But do people make mistakes only with strategies? No, it is important to choose the right technologies as well. As one of the top brokers in the share market, we at Zebu offer trading accounts with lowest brokerage, and an online trading platform to help you focus only on executing your strategies efficiently. 4. Not Trying Out New Strategies Out-of-the-money options and in-the-money options are two types of options that many traders say they won't buy or sell. These rules don't make sense until you're in a trade that's going against you. We've all been there. A lot of people break their own rules when they face this situation. You can find several options trading strategies that can be integrated into your own system. The most important point here is that buying a call option is so much different than buying a stock or its futures. But it can be a lucrative career if you are starting out with a smaller capital. The smarter way to trade Be willing to learn new ways to trade options. Remember that options aren't the same thing as stocks. This means that their prices don't move the same or even have the same properties as the stock they're linked to. Time decay always needs to be taken into account when you make plans. Find a new trade that makes sense to you. Options can be a great way to get a lot of leverage on a small amount of money, but they can also quickly lose value if you dig yourself in too far. Be willing to lose a small amount of money if it gives you the chance to avoid a disaster in the long run. 5. Trading illiquid options Liquidity is all about how quickly a trader can buy or sell something without creating a big change in the price. A liquid market is one with ready, active buyers and sellers at all times. Here's another way to look at it: liquidity is the chance that the next trade will be done at the same price as the last one. It's simple: Stock markets are more liquid than option markets because they have more people buying and selling them. Stock traders only trade one stock, but options traders may be able to choose from dozens of options contracts. If you want to trade stocks, you'll only be able to buy one type of TCS stock. Options traders, on the other hand, can choose from 3 different expiration dates and a wide range of strike prices to trade. With these many options, the options market will probably not be as liquid as the stock market. Stock or options traders don't have to worry about having enough of a stock like TCS because it's usually a lot bigger than that. There is more of a problem with small stocks. If the stock is illiquid, the options of the same stock will likely be even more inactive. This is usually going to make the spread between the bid and ask price for the options look a little too big. For example, if the bid-ask spread is Rs 0.20 (bid = Rs 1.80, ask = Rs 2.00), and if you buy the Rs 2.00 contract, that’s a full 10 percent of the price paid to establish the position. It's never a good idea to start your trade with a 10% loss right away, just by choosing an option with a wide bid-ask spread. The smarter way to trade It costs more to do business when you trade options that aren't easy to sell. A simple rule you can follow is to make sure that the associated open interest for the strike price is at least equal to 40 times the number of contracts you want to trade. For example, if you want to trade a 10-lot, you should have at least 400 open orders. Open interest represents the number of outstanding options contracts of a strike price and expiration date that have been bought or sold to open a position. Any opening transactions increase open interest, while closing transactions decrease it. You can trade options that are easy to buy and sell. This will save you money and stress. Plenty of liquid opportunities exist. 6. Waiting Too Long to Buy Back Short Options There is only one piece of advice for those who do not buy back short options and it is as straightforward as it gets: Be willing to buy back short options early. There are a lot of times when traders will wait too long to buy back the options they've sold. There are a million reasons why. For example: You don’t want to pay the commission. You’re betting the contract will expire worthlessly. You’re hoping to make just a little more profit out of the trade. The smarter way to trade Know when to buy back your short options. If your short option becomes OTM and you can buy it back to take the risk off the table profitably, do it. A Rs 100 premium option might go down to Rs 2 at expiry. You wouldn’t sell a Rs 2 option to begin with, because it just wouldn’t be worth it. Similarly, you shouldn’t think it’s worth it to squeeze the last few paisas out of this trade. Here’s a good rule of thumb: If you can keep 80 per cent or more of your initial gain from the sale of the option, you should consider buying it back. As one of the top brokers in the share market, we at Zebu offer trading accounts with lowest brokerage, and an online trading platform to execute your strategies. To know more, please get in touch with us now.

Common Options Trading Mistakes And How To Avoid Them - Part 3

In our journey to list the common options trading mistakes that beginner traders make, we are at the very end. In this article, we will cover the final 4 common mistakes that options traders make and how you can avoid them by trading smarter. Before we begin though, you need to understand that options can help you grow a small account into a much larger one. However, you can enjoy all of that with the lowest brokerage you can find for options trading. Zebu gives you this and more. As one of the best brokerage firms in the country, you also get the best trading accounts from us. Please get in touch with us to know more. 7. Failure to Factor Upcoming Events When you trade options, there are two things you need to keep an eye on: the earnings and dividend dates for the stock you're betting on. If a dividend is coming up and you have sold calls, there is a higher chance that your premium will rise due to positive market sentiments. As the holder of an option, you are also not entitled to the dividends of the company. Therefore, you have to cover your call option and buy the underlying stock. The smarter way to trade Be sure to factor in upcoming events. Also, unless you're ready to take a larger risk of assignment, avoid selling options contracts with upcoming dividends. Trading during earnings season usually means you'll see more volatility in the underlying stock and pay more for the option. If you want to buy an option during earnings season, you can create a spread by buying one option and selling another. Understanding implied volatility can also help you make better decisions about the current price of an option contract and its anticipated future fluctuations. Implied volatility is calculated from the price of an option and reveals what the market thinks about the stock's future volatility. While implied volatility cannot predict which way a stock will move, it can help you determine whether it will move significantly or only slightly. It's important to remember that the bigger the option premium, the greater the implied volatility. 8. Legging Into Spreads Most rookie options traders attempt to "leg into" a spread by purchasing one option first and then selling the other. They're attempting to reduce the price by a few pennies. It simply isn't worth taking the chance. This scenario has also burnt many seasoned options traders, who have learnt their lessons the hard way. The smarter way to trade If you want to trade a spread, don't "leg in." Spreads can be traded as a single deal. Don't take on unnecessary market risk. You might, for example, buy a call and then try to time the selling of another call to get a slightly higher price on the second leg. If market circumstances deteriorate, you won't be able to cover your spread, so this is a losing strategy. You can be stuck on a long call with no plan to follow. If you want to try out this trading method, don't buy a spread and wait for the market to move in your favour. You may believe that you will be able to resell it at a greater price later, but this is an unrealistic expectation. Always treat a spread as a single trade rather than try to deal with the details of timing. You have to get into the trade before the market starts going down. 9 Ignoring Index Options for Neutral Trades Individual stocks can be quite volatile. For example, if there is a major unforeseen news event in a company, it could rock the stock for a few days. On the other hand, even serious turmoil in a major company that’s part of the Nifty50 probably wouldn’t cause that index to fluctuate very much. What’s the moral of the story? Index-based options trading can protect you from the massive swings that single news items might cause in individual stocks. Consider neutral trades on big indexes, and you can minimise the uncertain impact of market news. The smarter way to trade A short spread (also called a credit spread) on an index could be a good way to make money when the market doesn't move. In comparison to other stocks, index moves are less dramatic and less prone to be influenced by the media. Short spreads are typically designed to profit even if the underlying price remains unchanged. Short call spreads are considered "neutral to bearish," whereas short put spreads are considered "neutral to bullish." Remember, spreads involve more than one option trade, and therefore incur more than one count of brokerage. As we have mentioned before, avoiding these mistakes while starting on your options trading journey can go a long way in protecting your capital. While you take care of your options trading strategy, we take care of the rest. As one of the fastest-growing brokerage firms in the country, we provide our clients with the best trading accounts as well as the lowest brokerages for options trading. To know more about our services and products, please get in touch with us now.

10 Things To Keep In Mind If You Want To Become A Successful Trader

When you are new to trading and are Googling what it takes to be a successful trader, you’ll quickly become familiar with terms like "plan your trade; trade your plan" and "minimise your losses." And the amount of information available can soon overwhelm you. So, here is a simple, 10-step Gyan about what you should do in the first year of trading. Each of the guidelines below is vital, but their combined impact is powerful. Remembering these can considerably boost your chances of market success. But before we get into the article, make sure to always choose an online trading platform that offers either lowest brokerage or zero brokerage intraday trading. Never trade without a plan. A trading plan details a trader's entrance, exit, and money management criteria for each buy. With today's technology, it is easy to test a trading strategy before risking actual money. Backtesting allows you to test your trade concept using past data to see if it works. Once a plan is devised and backtested well, it can be employed in real trading. Your job is to simply keep to the strategy. Trading outside the trading plan, even if profitable, is considered a bad strategy. Trading As A Business Trading should be treated as a full-time or part-time business, not a pastime or profession. As a hobby, there is no genuine commitment to learning. A job without a regular income might be frustrating. Trading is a business with costs, losses, taxes, stress, and risk. As a trader, you are a tiny business owner who must research and plan to optimise your profits. Embrace Technology Trading is a cutthroat sport. It's safe to presume that the most successful traders use all available technology. Traders can use charting software to view and analyse markets in limitless ways. Using a good and trusted online trading platform with the lowest brokerage or zero brokerage for intraday trading is another important strategy. Backtesting an idea with historical data saves money. We can track trading from anywhere with our smartphones. A high-speed internet connection, for example, can considerably improve trading performance. Technology and keeping up with new products may be exciting and lucrative in trade. Preserve your trading capital. Saving money for a trading account requires time and effort. It's considerably harder when you have to do it again. Notably, safeguarding your trading capital does not imply never losing a trade. Every trader loses. Protecting capital means not taking needless risks and protecting your trading enterprise. Become a Student Of The Market Consider your career in trading as lifelong learning. Traders must keep learning every day. Remember that learning about markets and their nuances is a lifetime endeavour. Studying hard helps traders grasp economic information and help them develop an edge over the others. The ability to focus and observe allows traders to refine their skills. Politics, news, economics, and even the weather affect the markets. The market is fluid. Traders are better prepared for the future if they understand the past and current markets. Don’t Trade More Than You Can Afford to Lose First, be sure that all of the funds in your trading account are genuinely expendable. If it isn't, you should save. Money in a trading account should not be used to pay for college or the mortgage. It is dangerous to use the money for trading that is earmarked for critical expenses. Money loss is bad enough. It's even worse if it's capital that should never have been risked. Develop a Fact-Based Methodology Developing a strong trading strategy takes time. It's easy to fall for the online trading scams that promise trading strategies "so easy it's like printing money." Facts, not emotions or hope, should guide the creation of a trading strategy. In general, traders who are not in a hurry to learn can sort through the internet's vast amount of data more easily. Suppose you wanted to change careers, but you needed to spend a year or two in college to be qualified to apply for a job in the new field. Learning to trade takes at least the same amount of effort and research. Use a Stop Loss As a trader, you set your own stop loss. The stop loss might be in rupees or percentages, but it restricts the trader's risk. Using a stop-loss reduces tension when trading since we know we will only lose a certain amount. Even if a trade is profitable, not having a stop loss is undesirable. The trading plan's guidelines allow for lost trades to be exited with a stop loss. The aim is to profit from every trade, but that is unrealistic. Using a precautionary stop-loss reduces losses. Know When to Sell Inefficient trading plans and ineffective traders are the worst combinations for a trading career. If you feel like your trading strategy is not responding well over a period of time, then take the time out to re-assess and develop your strategy again. An unsuccessful trading plan is an issue that has to be solved. It is not the end of a trading career. An ineffective trader is one who sets a trading plan but is unable to follow it. External stress, bad habits, and inactivity all contribute to this issue. Traders who are not in top trading condition may consider resting. After resolving any issues, the trader can resume operations. Remain Focused on Trading Trade with a big picture in mind. It's normal to lose trades; it's part of trading. A winning deal is only one step towards a successful business. And the cumulative profits matter. A trader's performance improves once they accept wins and losses as part of the business. That is not to imply we cannot be happy about a successful deal, but we must also be aware of the possibility of a loss. Setting realistic goals is important for a trading career. Your company should make a reasonable profit in a reasonable time. Expecting to be a multi-millionaire by Tuesday is a recipe for disaster. Conclusion Understanding the value of each trading rule and how they interact can help a trader build a profitable trading firm. Traders who follow these criteria with discipline and patience might boost their chances of success in a highly competitive market.

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Are You A System or Discretionary Trader?

One of the decisions that new traders must make is whether to be a discretionary or a system trader. Discretionary trading is trading that is based on a decision. Based on current market conditions, the trader determines which deals to execute. System trading, on the other hand, is based on rules. The trading system determines which deals to execute; current market conditions are irrelevant. Discretionary and system trading can both be profitable. That is, the decision should be made based on the trader's personality. Some traders may immediately determine which kind of trading is best for them; others may need to try both sorts before deciding. Whether you are a system trader or a discretionary trader, we provide you with the best trading accounts to choose from. As one of the top brokers in share market, we provide one of the lowest brokerage fees to help you make as many trades as you would like for the day. The Benefits and Drawbacks of Discretionary Trading The trader picks the transactions to make based on the information available at the moment in discretionary trading. A discretionary trader can (and should) nonetheless stick to a trading plan with well-defined trading guidelines. They will use their discretion in accepting the trade and managing it. A discretionary trader, for example, may study their charts and discover that all of their requirements for a long trade have been met. Nonetheless, they may decline to make the trade since the volatility for the day is too low, and so the price is unlikely to reach the profit target for the trade. The benefit of discretionary trading is that it is responsive to market situations. You may have an excellent trading system, but if you are aware that it performs poorly in particular market conditions, you can avoid those trades. Alternatively, if you see your strategy performs well in other conditions, you might increase your position size somewhat during such times to optimise gains. The disadvantage of a discretionary method is that many traders are prone to second-guessing themselves. They may be inept at determining when to trade and when not to trade; consequently, a more methodical approach would be preferable. Discretionary systems are vulnerable to trader psychology; being overly greedy or scared can quickly erode the profitability of a discretionary trading system. System Trading Benefits and Drawbacks The choice to make a trade in system trading is totally dependent on the trading system. System trading choices are final. They do not allow the dealer to decline a trade at his or her discretion. If the criteria are met, the trade is executed. A system trader may study their charts and discover that their trading system's requirements for a short trade have been met. They will complete the transaction without any further deliberation. This is true even if their "gut" tells them it isn't a good trade. System trading techniques can frequently be automated since the rules are so well defined that a program can carry them out on the trader's behalf. Once a program has been built to determine when the requirements of a trading system have been completed, the program can make the trade without the trader's involvement. This involves entry, management, and exit. The system trading approach has the advantage of being immune to the trader's psychological whims. The system accepts all trades regardless of how the trader feels. The disadvantage is that systematic trading is not very adaptable. Trades are always accepted as long as the terms are met, even in less advantageous conditions. More rules can be introduced to the system to help overcome this problem, however, this often results in the loss of some winning trades. Discovering Your Personal Style Discretionary trading and system trading both aim to make money, but in slightly different ways. The two systems may even make many of the identical trades. Each will most likely be better suited to different types of traders. Discretionary trading is ideal for traders who desire complete control over their trading decisions, including entry, stop loss, and exit. Discretionary traders frequently feel uneasy about handing over total management of their trading to software. Discretionary trading is also for folks who just want to adjust their transactions to current market conditions. System trading, on the other hand, is ideal for traders that value speed, precision, and accuracy in their trading. System traders have no reservations about using a computer program to make trading choices for them. They may cherish the sense of diminished responsibility that this provides. Can You Use Both Methods? It is feasible to be a discretionary trader who employs system trading. However, it is not viable to be a system trader who also employs discretionary trading. A discretionary trader, for example, may use a trading system for their entries and take every deal that the system identifies. They can then manage and exit their deals at their leisure. A system trader does not have this option because they must adhere to their trading method exactly. If a system trader makes a decision without following the rules of their strategy, then he/she becomes a discretionary trader. All of your trades, whether you are a discretionary trader or a system trader, need to be complemented by the lowest brokerage and the best trading accounts you can find. As one of the top brokers in share market, we at Zebu offer low brokerage trading accounts and a high-end trading platform to execute your strategies. To know more, please get in touch with us now.

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Steps To Increase Your Trading Productivity

Full-time traders who treat their work as a business are the ones who succeed. But the trading business can get very lonely very quickly. This might psychologically hinder your productivity but there are a few steps you can take to drastically improve your trading productivity. Here are a few of them. But Before we get started on your journey to increase your trading productivity, we believe that you deserve one of the best trading accounts from one of the top brokers in share market.With Zebu, you get access to an extensive online trading platformwith which you can create the right trading system. The first step is to create alerts. Set price notifications based on what you're looking for. Alerts allow you to be informed about price changes or other changes at a specific time of day without having to sit in front of your computer all day long. To make the most of the rest of the day, you can take a break from the computer and take in the latest market news. An investor's ability to react quickly to market changes is helped by the timely distribution of alerts. Alerts have the potential to significantly boost output. Create a system for your job and keep to it. A person's productivity is directly related to the amount of time spent working. As you trade the market, come up with a plan for yourself. You'll be more motivated to work on improving your trading performance if you establish a system. Keeping to a routine you've established for yourself is the cherry on top. Instead of waiting for the market to shift in your favour, traders who focus on ethics and stick to a process are more likely to become more profitable in the long run. Examine your area of expertise Re-examine recent trades in your trading journal. It will assist you in refining your approach. You can get a sense of how successful your trades have been by going over your previous transactions and determining whether or not they were profitable. Is it better to hang on to the traded stock for a longer period of time or not? Will you make money or lose money? And there are many more questions you can answer by going over your previous trades. The present market trends might also be better understood by looking back at your trades. It's essential to review your work to determine where you're doing well and where you need to improve, as well as where you should focus your efforts in the future. Every great trader keeps a journal of their accomplishments. Fresh air is good for you. Taking a breath of fresh air might help you relax and improve your physical and emotional health. You'll feel better about yourself, your lungs will be clearer, your immune system will be stronger, and you'll have a calmer mindset, which is especially important for trading. Trading on the stock market puts traders under constant stress, therefore it's critical that they take a break and get some fresh air to de-stress. Taking a break has been shown to enhance output. Take some time to unwind and do something you enjoy. Make an effort to engage in activities other than trading, such as listening to music, binge-watching your favourite television show, or even taking a walk by the ocean alone. Pre-market, market-time, and post-market analysis can take up to eight hours of a trader's day, which can sometimes get boring. With such a demanding schedule, mental equilibrium is essential. It is important to take a break from work in order to maintain a healthy work-life balance. When traders relax, their energy system is rejuvenated and they are able to start fresh with their trading strategies, which increases their productivity. As one of the top brokers in share market, we believe that you deserve one of the best trading accounts that we have to offer, where you get access to an extensive online trading platform with which you can create the right trading system. Get in touch with us to know more.

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The Art Of Averaging

In the stock market, averaging is a group of trading strategies that use the basic principle of lowering or raising your share prices to deal with market changes. There are many different types of averaging strategies that a trader can use in different types of markets. For example, in an early bull market, the price of your stock can drop because of averaging. When strong fundamentals like an increase in PAT and steady revenue growth help, one can add to their stock holdings in small amounts. In a down market, on the other hand, an averaging strategy is used to lower one's risk of losing money, which makes the units bought more profitable. So, averaging is not just for losing trades. You can use this guide to learn about the different ways you can average your stocks out. Averaging involves executing a number of trades before you exhaust your capital. That is why you need the best online trading company that provides you with the best stock trading platform. We at Zebu find that it is our obligation to provide our traders with the best trading accounts so that they can average their investments with ease. Here are some of the different averaging strategies used by traders in the stock market. 1. Average down This is one of the most common ways to average. It is done by buying more shares after the price of the stock drops after the first one is bought. This means that the average cost of all the shares you own goes down. This also means that the breakeven point goes down, which makes it easier to make money. This is shown in the following example. Here is an example: Ramesh and Suresh think that ITC's stock price is going to rise. Assume that both of them have a capital of Rs 1 lakh and need to make a profit of Rs 5,000. Ramesh invests a lump sum of Rs 1,00,000 in ITC at 100 (1000 shares). For him to make a profit of Rs 1,500, ITC needs to move up to 105. Suresh, on the other hand, expects some volatility in the stock for the short term. So he invests Rs 50,000 at 100 (500 shares), Rs 25,000 at 98 (255 shares) and Rs 25,000 at 96 (260 shares). HE has averaged down and holds 1015 shares at an average of 98.47. For Suresh to make a profit of Rs 1,500, ITC's share price needs to move just to Rs 103.44. In this scenario, Suresh has clearly made a better decision since he divided his capital to buy the shares at lower prices. In other words, he has averaged his cost for a better risk-reward ratio. 2. Average up A lot of people use the strategy of averaging up when the market is going up, which is called a "bull market." Traders use this strategy if they know that the original trend of the stock is still going strong and has a lot of room for growth. Ramesh, who thinks ITC stock is going to rise, buys 100 shares at 1,660. In the next few days, let's say that the price of ITC stock rises from this point. Now that he's sure he's right, Ramesh buys 100 shares each at a price of 1960 and 2250. As Ramesh thought the stock would go up at these prices, he took his total transaction cost to 5,87,000. If you want to buy 300 shares of XYZ, this is how you can improve your conviction. Suresh had the same bullish expectation and didn't average up his position and was left with his initial 100 shares instead. At the end of ITC's bull run, Ramesh will be left with more profits than Suresh. Another important averaging technique is the Pyramid strategy. Traders average by breaking down their position size by investing a larger sum at the first price and keep reducing their quantity of shares as the price moves as per their expectations. However, it is a very risky strategy reserved only for experienced traders. For the sake of capital protection, we will not be getting into a detailed explanation of the strategy. To sum up, averaging is a common way to trade in the stock market. It means scaling up or down on the price of a share to handle the volatility of the market. Since it can become complex if it is not executed properly, you need the best trading accounts to average your trades and investments. As a leading online trading company, we provide you with the best stock trading platform to average effortlessly.

Calendar Spreads In Futures Contracts - A Simple Arbitrage Trading System

As the name implies, a calendar spread is a spread technique in which you profit from the price difference between futures contracts for the same underlying in different expiries. When compared to taking a directional view on the Nifty or individual stocks, this is considered a lower-risk and more predictable strategy. Calendar spread trades are popular among institutions and HNIs looking for low-risk tactics that allow them to earn significant rupee returns based on volume. Executing calendar spreads requires a huge amount of analysis and the lowest brokerages you can find in India. As one of the fastest-growing stock broker companies in India, we at Zebu have created the best trading platform for calendar spreads and other futures and options strategies. Let's take a look at what a Calendar Spread is and how it works. What Is A Calendar Spread? The Calendar spread is the purchase and sale of two futures contracts on the same underlying for different expiries. By buying one contract and selling the other, you can establish a calendar spread between Nifty June and Nifty July, for example. This way, your calendar spread payoffs depend on the spread increasing or contracting. For example, the Calendar spread definition states that you go long on the Calendar spread when you expect the spread to broaden and short on the Calendar spread when you expect the spread to reduce. Calendar spread process flow Remember that you can execute a Calendar spread in both options and futures. Both are popular in India, but for the sake of simplicity, we will focus on the calendar spread on Nifty futures. Calendar spreads on options will likewise follow the same logic. Calculate the fair value of the current month contract as the first step in the Calendar spread. The fair value of the mid-month or far-month contract can be calculated in the second stage. You can buy the underpriced contract and sell the overpriced contract once you notice the mispricing. Your Calendar spread is now complete. You can either buy the current month contract or sell the mid-month contract based on the relative mispricing. You can also sell the current month contract and buy the mid-month contract as an alternative. There is no restriction on this. Let's look at an example RIL June Futures are bought at Rs.2,245 and RIL July Futures are sold at Rs.2,250. Your spread is Rs.5 and you expect it to alter in your favour so that you can benefit. Assume that the RIL June futures rise to Rs.2260 and the RIL July futures rise to Rs.2,257 after a few days. When the calendar is closed, you earn Rs.15 on June futures but lose Rs.7 on July futures. In other words, you made an Rs.8 profit on the calendar spread. The spread changed from a positive of Rs.5 to a negative of Rs.-3, resulting in a net profit of Rs.8 on the calendar spread. This is how spread earnings are made. In most cases, the risk associated with such calendar spreads is minimal. Key factors to keep in mind It's worth noting that when you buy and sell a calendar spread, you're buying and selling futures of the same stock, but from contracts with different expirations, like in the example of Reliance Industries. What is supposed to be gained here is the difference between the prices of the two contracts. Of course, in our example, you received a bonus because the calendar switched from a positive to a negative spread, resulting in a significantly larger profit. Calendar spreads have a modest trading risk, so the earnings you make on them are also small. As a result, this is better suitable for risk-averse institutions that rely on volume to generate rupee gains. Now we'll look at the final feature of the calendar spread. What criteria do you use to determine if a contract is underpriced or overpriced? You must use the base approach or the cost of carrying approach for this. The predicted stock price is represented by the futures price. To put it another way, the spot price is simply the current value of the anticipated futures price. You may determine which contract is underpriced and which is overpriced using the cost of carrying method. Then, in accordance, you buy the underpriced contract and sell the overvalued, resulting in a calendar spread. Just a word of warning. Only by continuing to hold the position as a spread does a calendar spread remain low risk. If you're generating money on one leg, for example, it's not a good idea to record profits on that leg while holding a naked position on the other leg. When the logic of the calendar spread is broken, it becomes a speculative trading position with significant risk. As a result, only a combination approach may be used to open and close a Calendar spread. Reverse Calendar Spread When trading options on calendars, the reverse calendar spread concept is increasingly prevalent. The reverse calendar spread is when you buy a short-term option and sell a long-term option with the same strike price on the same underlying securities. You might buy a June 1500 Infosys call option and sell an August 1500 Infosys call option, for example. The majority of spreads are built as a ratio spread, which means that the investments are made in uneven quantities or ratios. When markets make a large move in either direction, a reverse calendar spread is usually the most rewarding. Because of its complex structure and larger margin requirements, it is more widely used among institutions than among individuals. When it comes to executing calendar spreads, you need access to the best trading platform from one of the most reliable stock broker companies in the country. We also complement our platform with the lowest brokerage for trading. Please get in touch with us to know more about our services and products.

5 Things To Keep In Mind During Volatile Markets

Right as we are escaping the third wave of a pandemic, we find ourselves in the midst of a war. And naturally, that has made global markets topple and become extremely volatile. What exactly is market volatility? Market volatility, in technical terms, refers to the standard deviation of stock market returns from the mean. Volatility is the fluctuations of the stock market in layman's words. What is the significance of market volatility? It is significant for three reasons. To begin with, market volatility is a measure of risk; the higher the volatility, the higher the market risk. Second, while volatility cannot be avoided, it may be managed. Your volatility plan will come in handy in this situation. Finally, there is an inverse link between stock market volatility and returns. Higher returns are associated with lower volatility, and vice versa. When the Nifty index is compared to the VIX, or volatility index, the dramatic surge in the Nifty after 2009 has been accompanied by a continuous and secular decline in the VIX. Similarly, the Nifty had reached a long-term bottom when the VIX reached a peak in 2008. So, how should you invest in volatile markets, given that volatility cannot be avoided entirely? Before we get started, it is our duty, as an online stock broker, to caution you about keeping your capital safe in a volatile market. However, if have advanced knowledge about a volatile market, you can make use of it to drastically improve your profits. That is why we have created a high-end online trading platform with the lowest brokerage for you to maximise your returns from the market. Here are five simple yet effective methods to manage a volatile market. 1. Stick to your financial strategy That is the first and most important thing to remember. If you look at the VIX chart over the last several years, you'll notice that it's been on a secular downward trend. However, if you look at the interim period, you'll notice that there have been at least 8-10 occasions when volatility has risen significantly. The main point is to stick to your long-term financial plan. This strategy is geared at your long-term objectives and has some built-in safeguards to deal with market volatility. The systematic investment plan (SIP), for example, is meant to take advantage of market volatility. SIPs are critical to ensuring that the power of compounding works in your favour because they are the foundation of your financial strategy. If you look at the performance of SIPs over the last 9 years, you'll notice that they've outperformed the index because they've taken advantage of market volatility. 2. Focus more on quality and less on risk This is in relation to your stock and stock mutual fund holdings. We usually add more mid-caps, small caps, sector funds, thematic funds, and so on when the markets are on a roll. When the markets are turbulent, never take on too much concentration risk. Second, look for stocks that have a history of strong levels of transparency and corporate governance. In a volatile market, they're your greatest bets. Third, concentrate on high-growth equities, high-margin enterprises, and industry leaders. In times of market volatility, they are the most likely to outperform. 3. Hedge with derivatives Futures and options are seen by many investors as a low-margin alternative to cash market trading. They are, in fact, great risk management tools. These derivative products should be used most effectively in volatile markets. When you're long on equities in a turbulent market, for example, you can use futures to lock in profits while still benefiting from roll premiums. Second, you can utilise put options to hedge your risk, as well as beta hedging with index futures to lower your portfolio's risk. If you're ready to be a little more daring and aggressive, volatility tactics like straddles and strangles can help you take advantage of tumultuous markets. In these uncertain times, you have a lot of options. 4. Make sure your asset mix is well-balanced When markets are volatile, how do you manage your asset mix? During volatile times, certain assets do not exhibit the same level of volatility as equities. When equities indexes are turbulent, for example, debt markets tend to be more stable. As a result, having debt in your portfolio gives stability and the security of a steady stream of income. Gold, on the other hand, usually benefits from macroeconomic volatility. In these turbulent times, increasing your gold exposure through gold ETFs or SGBs can be beneficial. The moral of the storey is to keep your asset mix varied to combat volatility. 5. If in doubt, don't do anything. Traders typically believe that there are only two trading methods to master: when to buy and when to sell. Actually, there is a third option: doing nothing. It is quite easy to be enticed into the market by the prospect of making money off a volatile market. The general guideline is that if you don't understand the market's undertone, you should stay out of it. Staying out at the correct time and doing nothing can be a crucial element of strategy in unpredictable markets. As a fast-growing online stock broker, we at Zebu always watch out for our investors and traders. If you choose to execute safe strategies during this volatile time, we back you up with the lowest brokerage possible. To know more about our state-of-the-art online trading platform and its features, please get in touch with us now

Why You Should Trade In Commodities During A Global Crisis

Commodity trading has a long history in India. The Bombay Cotton Trade was established in 1875, marking the first significant milestone. Then, in 1991, came the liberation policy, which boosted commodities trading. Futures were reintroduced in 1994 after being discontinued owing to war and food shortages. Agricultural goods were included as a result of the reintroduction. Before we get into the benefits of trading in commodities we would like you to know that at Zebu, one of the fastest-growing brokerage firms in the country, we have created the best Indian trading platform with the lowest brokerage for intraday trading. Commodities are traded on six markets in India. They are as follows: MCX stands for Multi Commodity Exchange. NCDEX stands for National Commodity and Derivatives Exchange. NMCE stands for National Multi Commodity Exchange. ICEX stands for Indian Commodity Exchange. ACE stands for Ace Derivatives Exchange. UCX stands for Universal Commodity Exchange. When it comes to market share, MCX has a 70 percent stake, NCDEX has a 25 percent share, and NMCE has a 5 percent share. Here are a few benefits of commodity trading in India: 1. A Reliable Option in a Crisis There aren't many people interested in trading commodities. A trader, on the other hand, may consider investing in metals such as gold, silver, platinum, and other precious metals. In times of inflation and economic uncertainty, these provide security. 2. Diversification of your portfolio If you're an investor who already invests in equities and bonds, you might want to examine commodities as well. You can diversify your portfolio and develop a risk-adjusted strategy this way. 3. Transparent Commodity trade has become more transparent in India because to online commodity trading. Price discovery is fair, and it is regulated by large-scale involvement. When there is such a large degree of engagement, it also aids in gauging the perception and outlook of commodity traders. 4. Possibility of High Returns When it comes to commodities trading, there's always the possibility that a trader will strike it rich. However, this is only achievable if a sound trading plan is in place. 5. Hedging Hedging is the practice of managing price risks in the futures market by taking an equal and opposite position. Certain factors in commodity trading, such as natural disasters, economic crises, or war, might cause commodity prices to rise. These commodities can be used as a risk hedge. 6. Anti-inflationary protection Commodity prices typically rise during periods of inflation. Investing in the right commodities will not only help you beat inflation but also help you make excellent profits. 7. Trading with a Smaller Margin Commodity trading allows you to trade with a reduced margin of 5% -10%. You can take bigger positions with less capital if you have a lower margin. 8. There will be no cut-offs Time decay is a constraint while trading Options. As the expiration date approaches, there is less time to cash in on the option financially. Time decay is not an issue in commodities futures because there is no expectation of a strike price at expiration. As we mentioned before, trading strangles requires thebest Indian trading platform and the lowest brokerage for intraday trading. As one of the best brokerage firms in the country, we have created a powerful trading platform that makes analysis easy for you. To know more about its features, please get in touch with us now.

Popular Indicators Used For Options Trading

Traders can use a variety of technical indicators depending on their trading style and the type of securities they are trading. This article focuses on a few key technical indicators that are often used by options traders. Options Trading can help you grow a small account into a much larger one. However, you can enjoy all of that with the lowest brokerage you can find for options trading. Zebu gives you this and more. As one of the best in the country, you also get the best trading accounts from us. Please get in touch with us to know more. What Makes Options Trading Unique In short-term trading, technical indicators are often used to help the trader in determining: Range of a move The movement's direction (which way?) How long will the price move? How long will the price move? The holding period is important since options are subject to time decay. A stock trader can keep a position indefinitely, whereas an options trader is limited by the option's expiration date and its term. Momentum indicators, which tend to detect overbought and oversold levels, are popular among options traders due to the time restrictions. Let's take a look at some of the most common indicators utilised by options traders, such as momentum and others. The Relative Strength Index (RSI) The relative strength index is a momentum indicator that compares the amount of recent gains to recent losses over a given period of time to determine overbought and oversold conditions in a security. RSI readings vary from 0 to 100, with a value more than 70 indicating overbought levels and less than 30 suggesting oversold levels. Individual stocks, rather than indexes, benefit from RSI because stocks exhibit overbought and oversold positions more frequently than indexes. The ideal choices for short-term trading based on RSI are options on highly liquid, high-beta stocks. Money Flow Index The Money Flow Index is a momentum indicator that takes into account both price and volume. Volume-weighted RSI is another name for it. The MFI indicator is a "trading pressure" indicator that gauges the entry and outflow of money into an asset over a given period of time (usually 14 days). A value of more than 80 suggests an overbought stock, while a reading of less than 20 indicates an oversold stock. MFI is more suited to stock-based options trading (rather than index-based) and longer-duration contracts due to its reliance on volume data. The MFI can be a leading signal of a trend change when it goes in the opposite direction as the stock price. Put-Call Ratio (PCR) The put-call ratio compares the amount of trade in put and call options. Changes in the put-call ratio's value, rather than its absolute value, indicate a shift in general market opinion. When the ratio of puts to calls is greater than one, it indicates bearishness. When call volume exceeds put volume by more than one, the ratio is less than one, suggesting bullishness. Traders, on the other hand, regard the put-call ratio as a contrarian indication. Open Interest The open or unsettled contracts in options are referred to as open interest. The OI may not always suggest a specific uptrend or downtrend, but it does give insight into the strength of a trend. Increased open interest signals new capital influx and, as a result, the continuation of the current trend, whereas dropping OI signals a weakening trend. While you take care of your options trading strategy, we take care of the rest. As one of the fastest-growing best trading accounts as well as the lowest brokerages for options trading To know more about our services and products, please get in touch with us now.

Everything You Need To Know About Paper Trading

With the rise of high-speed trading and algorithmic trading in the markets, day trading has become extremely competitive. But it is an extremely difficult field to succeed in. That is why you need to practise as much as possible. Executing paper trading requires a huge amount of analysis and the lowest brokerages you can find in India. As one of the fastest-growing stock broker companies in India, we at Zebu have created the best trading platform for calendar spreads and other futures and options strategies. What Is Paper Trading and How Does It Work? Simulated trading, often known as paper trading, allows aspiring traders to buy and sell stocks without risking real money. Investors might be able to replicate trading with a basic spreadsheet or even pen and paper, but day traders would find it difficult to manually record tens of transactions per day and calculate their profits and losses. However, there are many online platforms that provide paper trading accounts for people to practise with before investing real money in the market. This allows them to try out different techniques and get some practice with the software. Consider paper trading platforms that offer live market feeds before you start with real money while looking for the ideal place to practise your trades. This is critical since you'll want to be able to trade without having to wait for delayed feeds or orders to be processed. TradingView is a commonly used market simulator that most traders get started with. To utilise the simulator, day traders on these platforms will need to open an account, which may include depositing the minimum funding requirements. The good news is that traders can practise with the simulator before risking their money on live transactions. It's important to remember that there are some distinctions between simulated and live trading. Simulators may not account for slippage, spreads, or commissions, which can have a substantial impact on day trading returns on a technical level. On a psychological level, traders may find it simpler to follow trading system guidelines when there isn't any money at stake—especially if the trading system isn't performing well. Paper Trading Suggestions The way you trade on a given day is primarily determined by the approach you utilise. Some day traders, for example, rely solely on "feel" and must rely on paper trading accounts, whereas others utilise automated trading systems and backtest hundreds of systems before paper trading only the most promising. Traders should pick the finest broker platform for their needs depending on their trading preferences and then practise trading on those accounts. Here is where Zebu comes in. When paper trading, it's critical to keep a detailed record of your trades and to follow your approach over a long enough time frame. Some methods may only work in bull markets, leaving traders vulnerable when the market turns bearish. In order to verify that their strategies hold up successfully and deliver the maximum risk-adjusted returns, it's critical to test enough stocks in different market scenarios. Finally, paper trading isn't only a one-time activity. Day traders should use the paper trading capabilities on their brokerage accounts on a frequent basis to test new and experimental tactics before entering the market. For day traders who risk tens of thousands of rupees in hundreds of trades every day, simple mistakes can be extremely costly. As a result, paper trading is an essential component of long-term success. Advantages of Paper Trading Starting with a paper trading account can help you learn more quickly. However, there are additional advantages to self-education. To begin with, there is no risk. You don't lose anything because you aren't utilising real money. You can assess your mistakes and develop a winning plan. This also helps you gain confidence and gives you the opportunity to practice the tactics and strategies required to be a good day trader, such as profit or loss taking and pre-market preparation. Finally, it reduces the amount of stress associated with trading. You may focus on your strategies in a calm environment, removing the emotional aspect of trading. Paper Trading's Drawbacks While paper trading will provide you with the necessary practice, there are a few drawbacks. You don't get a sense of how fees and commissions affect your trades because it doesn't use actual money. These simulators also don't truly depict market reality, including lows and highs, as well as the emotion that comes with trading. As a result, keep in mind that this is a simulated environment where you can practice your trading talents. Practice Makes Perfect If you are new to trading or investment, spend as much time as possible with paper trading before entering the live markets. Make an effort to experiment with new strategies and ideas so that you can become more comfortable. Ultimately, the goal of paper trading is to shorten your learning curve. When it comes to executing paper trading, you need access to the best trading platform from one of the most reliable stock broker companies in the country. We also complement our platform with the lowest brokerage for trading. Please get in touch with us to know more about our services and products.

Everything You Need to Know About Trailing Stop Losses

Online brokers are always looking for new ways to keep investor losses to a minimum. One of the most popular downside protection techniques is a stop-loss order, which automatically sells a position at the current market price if the price drops to a specified level, preventing further losses. Before we get into the basics of trailing stop loss, it’s important to know that it takes a certain level of experience before you can become profitable. However, if you would like to get started, you need access to the best trading platform from one of the best online share brokers in the country. At Zebu, we give you all of this and more - we also offer the lowest brokerage for intraday trading. Trailing stop-loss order Traders can improve the effectiveness of a stop-loss order by combining it with a trailing stop, which is a trade order in which the stop-loss price is set at a percentage or rupee amount below the market price. When the price goes up, the trailing stop goes up with it. The new stop-loss price remains at the level it was dragged to when the price finally stops climbing, automatically safeguarding an investor's downside while locking in profits when the price achieves new highs. Trailing stops can be used with regular stop-loss orders on stock, options, and futures exchanges. The Functions of a Trailing Stop Consider the following scenario for a better understanding of how trailing stops work: Buy price: Rs 100 Price at the time of setting a trailing SL: Rs 100.5 Trailing amount: Rs 1 Immediate SL: 99.5 If the market goes up to 101, the trailing SL will be moved up to 100. If the price goes back to 100, your SL order will be triggered and you will exit with a slight loss (considering slippage, taxes, and fees). It's critical to avoid the need to reset your trailing stop during market dips, or your effective stop-loss will be lower than intended. When you notice momentum peaking in the charts, especially when the stock is hitting a new high, it's also a good idea to rein in a trailing stop-loss. It's critical to assess your maximum risk tolerance when using classic stop-losses with trailing stops. Set a stop-loss at 2% below the current stock price and a trailing stop at 2.5 percent below the current stock price, for example. As the price of the stock rises, the trailing stop will outperform the fixed stop, making it redundant. To make this approach work on current trades, you'll need to select a trailing stop value that takes into account the stock's regular price movements while catching just the genuine price decline. This can be accomplished by analysing a stock for several days before engaging in active trading. Furthermore, when using a trailing stop, there is the risk of setting it too tight during the early phases of the stock's support. The consequence will be the same in this situation, with the stop being triggered by a temporary price downturn, leaving traders concerned about a perceived loss. This might be a difficult mental pill to take. You need the lowest brokerage for intraday trading as well as the best trading platform. As a leading online share broker, we at Zebu have created the perfect trading platform with an extensive amount of features to simplify trading for you.

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Currency Trading In India - Why You Should Get In Now

International corporate heavyweights have set up shop in India because of the country's size, the scope for innovation, and the soundness of its financial sector. From a highly regulated environment to a more liberalised one, India's robust and stable financial sector has gradually evolved. It has been ranked as the third most attractive investment location in the world by UNCTAD's World Investment Prospects Survey. Due to the country's liberal rules, the Indian market offers enormous potential for profit. Furthermore, currency trading in India is becoming the go-to place for traders from around the world to transact day and night, thanks to this dynamic environment. In India, the foreign exchange market, also known as the currency trading market, serves as a marketplace for the exchange of foreign currencies. Market information in a nutshell The NSE, BSE, MCX-SX, and United Stock Exchange all offer trading platforms for currency futures. With Zebu’s lowest brokerage fees, and our credibility as one of India’s best share market brokers, we guarantee that you will have access to the best trading accounts in the country. The currency market is open from 9:00 a.m. to 5:00 p.m. on weekdays. For currency trading, there is no cash or equity form, like we use in the Indian stock market. To begin trading, you will need a broker, but you will not require a DEMAT account in order to do so. In the foreign exchange market, we can only deal in the futures and options segments. Forex trading in India has shown an upward trend with the introduction of futures derivatives. Individuals and investors were previously only able to trade with banks and major corporations before this change. Both banks and enterprises were given greater freedom to store and trade foreign currencies as a result of India's currency liberalisation. Derivative products were necessary as trading laws were loosened to facilitate the integration of global and local economies. What is the rationale for using derivatives to manage risk? As with other financial instruments, the value of a currency fluctuates widely in response to changes in the broader economy and politics. Inflation, foreign commerce, and interest rates are all critical, but the most critical is political stability. Governments can influence the value of their currencies by intervening in the foreign exchange market through the actions of their central banks. They either flood the market with their own currency to reduce the price or buy to raise the price in order to make a statement. The currency trading market in India can also become unstable due to large orders by large firms. Foreign exchange supply is increased when a country's exports rise. Additionally, market participants' expectations of national economic performance and their faith in the economy of their respective countries also play a role. Currency trading in India could be severely disrupted as a result of these operations. For a long time, any one entity can't control India's currency trading market because of its enormous size and volume. Because of their enhanced transparency, liquidity, counter-party assurance, and accessibility, exchange-traded currency futures are an ideal hedging instrument. Due to its size, volume, and frequency of trade, currency trading in India is a substantial contributor to the national economy. As businesses of all sizes make up the majority of the economy, everything that helps them grows the national economy. Currency trading can be a rewarding endeavour if you keep abreast of global market developments. You can explore these options and more with Zebu. Our lowest brokerage fees allow you to purchase the index fund of your choice effortlessly, making yours one of the best trading accounts for currency trading.

Trading The Head And Shoulders Pattern

The head and shoulders chart pattern, which shows a baseline with three peaks, the middle peak being the highest, is a common and easy-to-spot pattern in technical analysis. It is mainly used to detect a bullish-to-bearish trend reversal. The pattern can be employed by all sorts of traders and investors because it appears in all time periods. The chart pattern gives crucial and immediately visible levels, making entry levels stop levels, and target goals simple to apply. Before you start investing or trading, always consider going with one of the best brokerage firms in the country like Zebu. As a top broker in share market we have created one of the best stock trading platforms for you to use and invest. Head and Shoulders pattern We'll start with the head and shoulders pattern and then go on to the inverse head and shoulders pattern. Pattern formation (as seen at market peaks): As you can see, in this pattern, there is a price rise, followed by a dip (left shoulder) and a peak (head) and a dip to the low of the left shoulder and a peak (right shoulder) to the highs of the left shoulder and a drop below the low of the left shoulder and the head. By joining the lows of the left shoulder and the head, you can get the neckline. Inverse Head and Shoulders Pattern formation (as seen during market bottoms): A price drop followed by a rise (left shoulder), followed by a deeper fall and a rise to the same level (head) and a drop to the lows of the left shoulder and a breakout (right shoulder) from the high of the head and left shoulder. The highs of the left shoulder and the head form the neckline. How to Profit from the Pattern Traders should always wait for the pattern to finish because a pattern may not develop at all and the price may move in the opposite direction. Patterns that aren't completed yet should be kept an eye on, but no trades should be made until the price breaks the neckline. After the peak of the right shoulder, we look for the price of a stock to move lower than the neckline. After the right shoulder has formed, we wait for the price to move over the neckline for the inverse head and shoulders to show up. When the pattern is done, a trade can be initiated when the neckline is broken. Plan your trades with stops and targets. Another way in requires more patience and the risk that the move won't be capitalised at all. After a breakout, this strategy is all about waiting for a pullback to the neckline. This is safer because we can watch to see if the pullback ends and the original breakout direction stays the same. Putting Your Stops in Place In the head and shoulders pattern, your stop-loss order can be placed slightly above the right shoulder. Alternatively, the pattern's head can be employed as a stop, but this carries a significantly higher risk and so diminishes the pattern's reward to risk ratio. In the inverted pattern, the stop-loss order can be placed slightly below the right shoulder. The stop can be placed at the head of the pattern once more, but this increases the trader's risk. Choosing Your Profit Targets The price differential between the head and the low point of either shoulder is the pattern's profit target. The difference is then deducted from the neckline breakout level (at a market peak) to determine a downward price target. The difference is added to the neckline breakout price to create an upward price target for a market bottom. Between recognising the breakout and attaining the appropriate profit target, investors may have to wait a long time—up to many months. Real-time monitoring of your trades can help you predict their outcomes better. As one of the top brokers in share market, we have created the best stock trading platform for you to invest in wisely. Our tool is designed to help investors and traders alike to analyse a company with a wide range of indicators and screeners as per your strategy. As one of the best brokerage firms in the country, we invite you to open a trading and investment account with us.

Trading Indicators To Use During Volatile Periods

Many indicators are used by traders and analysts to monitor volatility and decide the best time for entering or exiting a trade. Increased fear in the market amid significant market movements can give ideal trading ground for experienced investors, while high volatility is typically a barrier to reckless trades. Low volatility and complacency among investors, on the other hand, can signal a bubble in the market and a possible market top. It is usual to utilise the volatility index (VIX), ATR and Bollinger Bands to measure volatility relative to other indicators. At Zebu, we understand that traders and investors with very high aspirations need nothing short of the best Indian trading platform with its plethora of features and scanners. As one of the top brokers in share marketin India, we have the privilege of providing our users with their best trading accounts. VIX Volatility in the market is measured by the Volatility Index. Volatility in Nifty 50 can be measured by a ticker symbol known as VIX, which is updated throughout the trading day and reflects the current implied or expected volatility. Other traders use large institutions' volatility perceptions (as indicated by VIX) to help them gain an idea of the expected volatility of the market in the days to come. While numbers in the low teens imply minimal volatility, VIX rates above 30 indicate increased volatility. Average True Range Any stock, exchange-traded fund, FX pair or commodity can be used to apply the average true range indicator established by J. Welles Wilder Jr. ATR is a 14-day exponential moving average (EMA) of what Wilder called the "true range" of an asset's price movement. One of three following equations produces the greatest number, which is used to determine the true range. Current day's high minus the current day's low Current day's high minus the previous day's close Previous day's close minus the current day's low Finally, an EMA is produced using the ATR (computed using the highest value found when the three equations are solved). The greater the ATR, the greater the volatility of the market. There is a correlation between ATR values and quiet trading periods. Bollinger Bands There are two bands or lines that are two standard deviations above and below a 20-day moving average, which shows as a line in between the two bands, in the Bollinger Bands indication, which is another charter indicator. The wider the bands, the more volatile the market is, and the narrower the bands, the less volatile the market is. Bollinger Bands, like ATR, can be applied to any chart of a stock or commodity. You can get one of the best Indian trading platforms with its plethora of features and scanners to build your investment portfolio. As one of the top brokers in share marketin India, we have the privilege of providing our users with their best trading accounts.

Three Of The Most Commonly Used Pullback Strategies

Are you aware that one of the most fundamental trading methods is to trade trend pullbacks? Yes! There are numerous strategies to earn from pullback trading. You may profit from trading pullbacks across all time frames. This is because a trend can occur on any time scale, from the 5-minute to the monthly. Before we get into commonly used pullback strategies we would like you to know that at Zebu, one of the fastest-growing brokerage firms in the country, we have created the best Indian trading platform with the lowest brokerage for intraday trading. In today's blog, we'll present six profitable pullback trading strategies, but first, let's define pullback trading: What does the term "Pullback Trading" mean? A pullback is a temporary halt or little decline in the price of a stock or commodity that occurs during an ongoing increase. A pullback is virtually synonymous with retracement or consolidation. The term "pullback" refers to brief price drops – say, a few consecutive sessions – before the uptrend resumes. Following a significant upward price movement, pullbacks are sometimes considered as buying opportunities. For instance, following a great earnings report, a stock may have a significant jump before reversing as traders liquidate existing positions. On the other side, positive earnings are a fundamental indicator that the stock will continue to climb. Most pullbacks see a security's price move to a technical support level, such as a moving average or pivot point, before resuming its uptrend. Traders should pay special attention to these important support levels, as a breach below them may indicate a reversal rather than a retreat. Now that we understand what pullback trading is, let us explore several tactics for trading pullbacks: 1. Pullback to a trendline Determining the trend's direction should be quite straightforward. The swing high and low structure is the most straightforward way to recognise a trend. An uptrend is defined by a series of higher highs followed by a series of higher lows. Whereas a downtrend is defined by a series of lower lows and lower highs. The disadvantage is that trendlines are frequently validated more slowly. Three contact points are required to validate a trendline. You can always link two random locations, but it is only when you reach the third that you have a true trendline. As a result, traders can only trade the trendline pullback at the third, fourth, or fifth contact point. While trendlines perform well in conjunction with other pullback tactics, as a stand-alone strategy, the trader may miss numerous opportunities if trendline validation takes an extended period of time. 2. Pullback to moving average Without a question, moving averages are one of the most often utilised tools in technical analysis, and they may be used in a variety of ways. Additionally, you can utilise them to trade pullbacks. A moving average of 20, 50, or even 100 periods could be used. It is irrelevant because it is entirely dependent on whether you are a short-term or long-term trader. Shorter-term traders utilise shorter moving averages to get hints more quickly. Naturally, shorter moving averages are more prone to noise and false signals. On the other side, longer-term moving averages move more slowly and are less subject to noise, but may miss short-term trading opportunities. Consider the advantages and downsides for your own trading. 3. Pullback after a breakout Breakout pullbacks are extremely prevalent, and probably the majority of traders trade this price action pattern. Pullbacks following breakouts are frequently seen at market turning points, following the price breakout of a consolidation pattern. The most often used consolidation patterns are wedges, triangles, and rectangles. Open range breakout is another common strategy. Once the day's 15 minutes low and high are marked, traders enter a long position once the upper limit is broken on a good volume. In this situation, it would be ideal to wait for a pullback to the vwap or the 15-minute high for a better risk:reward potential. As we mentioned before, trading and investments requires the best Indian trading platform and the lowest brokerage for intraday trading.. As one of the best brokerage firms in the country, we have created a powerful trading platform that makes analysis easy for you. To know more about its features, please get in touch with us now

What You Can Know About The Market With The Put-Call Ratio

Market emotion can be gauged using a derivative indicator known as the Put-Call Ratio (PCR). Both a "call option" and a "put option" provide buyers the right to buy or sell a specific asset at a specific price, respectively. On any given day, the open interest in both a put contract and a call contract is combined to calculate the PCR. PCR = Put Open Interest/ Call Open Interest With lowest brokerage for intraday trading and at Zebu, we are constantly trying to provide customers with the best stock trading platform to make your online stock trading journey easy. Interpretation: A rising Put-Call Ratio, also known as a PCR, indicates that put contracts have a bigger open interest than call contracts. Traders are either negative on the market or using put options to protect their holdings from potential losses. There is greater open interest in call contracts than put contracts if the Put-Call Ratio or PCR falls below 0.5. This is a sign that investors are bullish on the market as a whole. A Put-Call Ratio of 1 shows that there are as many people interested in purchasing put options as there are in purchasing call options. Considerations that should be taken into account Investors can use the put-call ratio to get a sense of market sentiment before a market shifts. Aside from this consideration, it's vital to examine demand for both numerator and denominator (puts and calls). The denominator of the ratio contains the number of call options. In other words, a decrease in the number of calls exchanged will raise the ratio's value. Reduced call purchases without an increase in puts can raise the ratio. This is significant. To put it another way, the ratio doesn't have to climb dramatically in order for it to do so. As more bullish traders remain on the sidelines, the market becomes more negative as a result. However, this does not necessarily mean that the market is bearish, but rather that the market's bullish traders are waiting for a future event, such as the impending elections or RBI meetings. A Sign of Unpredictability: In India, the Put-Call Ratio is a common Contrarian Indicator. The market is due for a trend reversal if the readings are excessively high or low. Market players are overly pessimistic, and the market trend is likely to turn around soon. Similarly, exceptionally low levels signal that market participants are overconfident, and the market could turn red shortly if this trend continues. Like we mentioned earlier with lowest brokerage for intraday trading and at Zebu, we are constantly trying to provide customers with the best stock trading platform to make your online stock trading journey easy.

The Five Types Of Trading. Which One Are You?

Trading stocks is one of the most profitable ways to invest in the world. Every day, millions of traders and investors use the stock exchanges to try their luck and see how good they are at trading. Some people know how to trade well and make a lot of money, while others lose all their money in the market. A lot of the time, traders jump into stock trading before they know which type of trading is best for them. This article tells you about the different ways you can trade on the stock market. This will help you make better decisions and make money. As an online share broking company, we understand the importance of having the right tools in order to make a profit. Hence we have one of the best stock trading platform with the lowest brokerage for intraday trading. Different ways to trade on the stock market and what they can do for you: Intraday trading One of the most common ways to trade on the stock market is called "day trading" or "intraday trading." Intraday trading is where expert traders make more than average profits, but it is also the riskiest. Day traders buy and sell stocks or ETFs (Exchange-Traded Funds) in the same day. Day traders look at how stocks, indices, or ETFs are moving to make precise trades. They either buy first and then sell, or they sell first and then buy. But if you are new to trading, you should not trade on margin. If the trade goes against you, you could lose more money if you use margin or leverage. Positional trading Positional trading In positional trading, you can't sell first and then buy later, which is what you can do in day trading. It is a strategy for investors who are brave enough to ignore short-term changes in price and focus on long-term gains. Some positional traders look at how the price of a stock moves to figure out when to buy or sell. They draw lines of support and resistance on a chart to see where a stock is going. Some positional traders use technical indicators to try to figure out where a stock will go in the future. Some common technical indicators are RSI, MACD, Volume, Moving Average, Simple Average, etc. Swing Trading Swing traders usually look at the chart for different amounts of time, like 5 minutes, 15 minutes, 30 minutes, 1 hour, or even a whole day, to find the waves of price changes. Day trading and positional trading may overlap with swing trading. Investors and traders often think that swing trading is the hardest type of trading in the stock market. Swing traders, on the other hand, don't try to avoid volatility. Instead, they think that uncertainty is their best friend. In fact, the more volatile a stock is, the more money swing traders can make from it. So, if you're good at predicting the waves accurately, all you need is swing trading. Long-Term Trading Long-term trading is the safest of the different ways to trade. This type of trading is better for investors who are cautious than for those who are bold. A long-term trader looks at the news, looks at the balance sheet, studies the industry, and learns about the economy to figure out how much a stock could grow. They don't mind holding on to stocks for years, decades, or even for the rest of their lives. There are two kinds of long-term stocks: growth and income. Companies that do not pay dividends to investors are growth stocks. They put any extra money back into the business to help it grow. On the other hand, companies that pay healthy dividends on a regular basis are called "income stocks." Scalping Scalping is one type of day-to-day trading. While day traders look for opportunities and stay invested all day to make money, scalpers take advantage of waves by making a lot of short-term trades. A scalper needs to be able to watch the market closely, have a lot of experience, and be able to make precise trades. A scalper is willing to lose a few trades in order to make a few more. At the end of the day, they compare the trades that lost money with the ones that made money to figure out how much money they made or lost. The trades of a scalper can last anywhere from a few minutes to an hour. Momentum Trading Momentum trading is one of the easiest ways to make money on the stock market. Momentum traders try to guess how a stock will do in the future so they can buy or sell at the right time. When a stock is about to break out or does break out, the momentum trader gets out. On the other hand, when a stock goes down, they buy low and sell high. In conclusion The stock market is easier to trade in now that you can do it online with Zebu. Now that you know about the different kinds of trading, it's time to use what you've learned to make profits that defy gravity. We understand the importance of having the right tools in order to make a profit. As one of the best share broking company, we have a seamless trading platform with the lowest brokerage for intraday trading.

The Market Participants Of Derivative Trading

Investing is one of the most effective methods to spend your money. When you first begin investing, however, it is always advisable to stick with investment methods that provide great security and assured returns. The majority of early investments are based on a low-risk profile. Their risk appetite increases as they obtain more investment expertise and understanding of the financial market. It helps investors to diversify their assets and invest in financial instruments with higher returns if they have a high risk profile. While investing can be one of the most effective methods to spend your money, there is a certain amount of risk involved - especially if you don’t use the right tools. At Zebu, a share broker company, we offer the best online trading platform for our investors, while also giving them an added advantage of lowest brokerage for intraday trading. What Exactly Is a Derivative? Derivatives are financial contracts between two or more parties that are based on an underlying asset like stocks, commodities, currencies, etc. The value of the derivative is based on the price or value changes of the underlying asset. You can use derivatives to protect a position, guess which way an underlying asset will move, or increase the value of your holdings. In order to trade derivatives, you must use an exchange or trade over the counter (OTC). Over-the-counter trade is conducted between two private parties without the involvement of a centralised authority. Furthermore, because the contract is signed by two private individuals, it is vulnerable to counterparty risk. The chance, or rather the danger, of one of the parties defaulting on the derivative contract, is referred to as this risk. The Benefits of Derivatives: 1. Hedging The greatest approach to protect yourself from a disastrous investment is to use a derivative contract. When you trade derivatives in the stock market, you're effectively betting on whether the price of a certain stock will rise or decline. As a result, if you suspect that the stocks in which you have invested are losing value, you could get into a derivative contract in which you precisely predict the stock's value decline. You can profit from your derivatives contract by hedging your stock market losses as the stock price begins to fall. 2. Arbitrage A commodity or asset is purchased at a low price in one market and then sold at a much higher price in another market in arbitrage trading. Derivatives trading provides an advantage in terms of arbitrage trading, allowing you to profit from price disparities between markets. 3. Managing Market Volatility You can insulate yourself from the volatility of other asset classes by investing in derivatives. You can, for example, invest in stocks and then get into a derivatives contract with the same underlying asset. It can protect the health of your portfolio because either of the assets can offset the losses of the other. 4. Excellent investment opportunity While most traders enter the derivatives market to speculate and profit, it is also an excellent place to put any extra money. Without affecting any of your existing underlying equities, your funds will earn additional returns. Derivatives Market Participants 1. Hedgers They are the creators, manufacturers, and distributors of the underlying asset, and they typically sign into a derivative contract to reduce their risk. Simply defined, hedgers guarantee that they will receive a preset price for their assets and will not lose money if values fall in the future. For example, if you own shares in a company that is currently trading at Rs. 1000 and plan to sell them in three months, you don't want a drop in market prices to depreciate the value of your investment. You also don't want to miss out on profits if the market increases in value. You can assure that you are profitable regardless of whether the stock price falls or rises by taking a hedging position and paying a small premium. 2. Speculators These are real traders that try to forecast the future price of commodities based on a variety of criteria and keep track of their prices on a regular basis. If they believe the price of a certain item will rise, they will purchase a derivatives contract for that asset and sell it at expiration to profit. A speculator, for example, will wager that the stock price will not fall in the above example when you got into a derivatives contract to protect yourself against the stock price decreasing. The speculator will earn if the stock price does not decline during the specified period. 3. Margin Traders Margin traders are investors that trade on a daily basis and make profits and losses solely based on market moves that day. The margin refers to the minimum amount paid by the investor to the broker in order to participate in the derivatives market. These traders don't purchase and sell with their own money; instead, they borrow the money from a stockbroker as a margin. 4. Arbitrage Traders Arbitrageurs are traders who acquire securities at a cheaper price in one market and then sell them at a higher price in another. They can essentially profit from pricing differences because they are low-risk. Conclusion Investing in derivatives, like all other investment tools, demands a thorough grasp of the market and the ability to make decisions only after gaining sufficient knowledge. You can make good money using derivatives if you invest based on knowledge. As we mentioned earlier, tools are critical for your investment to go smoothly. At Zebu, a share broker company, we offer the best online trading platform for our investors, while also giving them an added advantage of lowest brokerage for intraday trading.

Everything You Need To Know About Put Options

Beginner investors should know enough about the market to be able to predict how economic, political, or social factors will change the current market trend. This will help them make profits easily. The same is true for learning about financial instruments that can give you big profits if you know how to trade them well. One type of investment tool is a derivative contract called a "put option." As an online trading company, we understand the difficulties of working with an unresponsive platform and offer our customers with the best trading platform and lowest brokerage options. What are put options? How do they work? A put option is a derivative contract that gives you the right, but not the obligation, to sell a certain amount of the underlying asset at a certain price and date. The agreed-upon price set by the contract is the strike price. A put option is a great tool for sellers who want to protect their investment if the underlying asset's price drops in the future. The underlying asset's value could fall below what the buyer agreed to pay for it. The buyer loses money because of this. But because the parties have already agreed on a strike price, even if the current price is lower, the seller gets the strike price that was agreed upon. This lets the seller make a lot of money even if the market value of the asset has gone down. How are a call option and a put option different from each other? A call option is a derivative contract that gives a person the right, but not the obligation, to buy a certain amount of an underlying asset at a certain strike price and on a certain date. With a call option, you can make money if the value of the underlying asset goes up before the option's expiration date. If the value of the underlying asset goes above the agreed-upon strike price, the investor can buy the underlying asset for much less than the market price. What's good about using put options? When buying an options contract, you have to decide whether to buy a put option or a call option, so it's important to know the benefits of each. When compared to each other, a put option is better than a call option. 1. Time decay is a good thing If you want to make money trading derivatives, time is very important, and options are a time-bound asset that gives put sellers an advantage. The closer an option contract gets to the end of its expiration date, the less valuable it becomes. Because of this, people who sell put options are more likely to make money from time decay if they sell the contract while the option is still valuable. On the other hand, time decay does not help the person who has the call option in this case. 2. Cost-effective The underlying asset or stock of an option can change in any way. Its value could change a lot depending on what is going on in social, economic, and political scenes in the world. For an investor to make money on a call option, the option must be bought for less than the strike price. When investors buy a put option, on the other hand, they might make money if the price of the underlying asset stays the same or even goes down a little. So, a trader who buys put options is more likely to make money than a trader who buys call options. 3. Implied Volatility Implied volatility describes the expensiveness of an option contract. When the implied volatility of a market is high, the price of the option contract tends to be higher. If you were trading put options, you'd want to sell when the price was high and buy when the price was low. This is only a good idea when implied volatility is high but goes down slowly over time. Experts in the market have known for a long time that high implied volatility tends to go down over time. This means that traders who buy a put option will make money over time because the market is naturally in their favour. Conclusion When you first start investing, it seems like market forces are in charge, but the longer you invest, the more you learn about them and how they work. The longer you trade, the better you'll be able to spot things that are likely to affect the market you're trading in and take steps to protect your money. The same can be said about put options, which can bring in more money than call options. But you should make sure you know everything you need to before putting money into options trading, especially put options. An unresponsive platform can cause more problems than you anticipate so at Zebu, an online trading company we offer our customers with the best trading platform and lowest brokerage<.b> options.

Everything You Need To Know About Call Options

When you first start investing, you'll quickly discover that the Indian share market is an ocean you'll need to master in order to avoid losses and maximise profits. Although a large number of financial instruments accessible for investment in the Indian market gives a wealth of profit-making chances, if you are unfamiliar with any of them, you may wind up losing money. When you're looking for high-return investing opportunities, the first thing you'll notice is an Options Contract. The value of an underlying asset, such as a stock or a security, is usually the basis for this financial contract between two parties. If you are looking for a seamless online trading platform your search ends here. As a share broker company we offer our customers endless opportunities and the best trading accounts to help them focus more on making profits. What Does the Term "Call Option" Mean? A call option is a contract between two parties in which one party has the right, but not the duty, to buy a specific underlying asset at a predetermined price and on a predetermined date in the future. You are not legally obligated to execute the options contract unless it is profitable to you because there is no duty on the need to make the purchase as indicated by the call options contract. Only if the previously decided amount is less than the underlying asset's current price on the date the options contract is exercised can the purchase be profitable. The strike price refers to the underlying asset's specified price. The call option will result in losses unless your strike price is lower than the underlying asset's price on the date of execution. Consider the following illustration. If you buy a Wipro’s Call option for Rs 25 with the strike price as 500, you have the option of buying Wipro’s stock at Rs. 500 on the call option's expiration date (before expiry). If the price of Wipro stock on settlement day is Rs. 480, however, exercising your call option would be a loss because you could have purchased the stock in the open market for a lower price. If the price of Wipro stock on settlement day is Rs. 520, on the other hand, you make a profit by exercising your call option. You paid a non-refundable fee of Rs. 25 to obtain this right to acquire the stock without any obligation to buy, which will be your maximum loss if you decide not to exercise the contract. Most investors prefer to buy call options rather than put options. There are a number of causes for this, which are stated below: 1. Investing in a Cost-Effective Way Investing in shares or other derivatives involves a significant amount of capital to make the investment sustainable and profitable. Buying a call option, on the other hand, is as simple as paying the premium, which is based on the underlying asset, making it more inexpensive to purchase. You can invest in a cost-effective manner by using a call option in this way. 2. Risks are less severe Investing in a call option is far less hazardous than investing in stock or other securities directly. Because call options are not particularly volatile, they can be an excellent risk management tool. The amount you spend as a premium for the privilege to acquire the call option is the full extent of your losses on a failed call option. 3. Covered Calls Can Help You Earn Premium Even after purchasing a call option, you can increase your profits by selling the contract on the secondary market. If the underlying asset you acquired a while ago has risen in value, you can receive a premium by writing a call option with the strike price equal to the current market value. In options jargon, this transaction is known as a covered call, and it allows investors to gain additional earnings. Your search for a seamless online trading platform ends here. As a share broker company we offer our customers endless opportunities and the best trading accounts to help them focus more on making profits.

What Are Futures Contracts And How Do They Work?

Investors who want to diversify their portfolios by investing in other types of assets have found that derivative trading has been very profitable. Some people like to trade options, while others like to trade Futures. But because futures contracts are so complicated, you need to know everything there is to know about them. Are you a regular trader? Then you will need the best trading platform, At Zebu, as a share broker company we offer just that. Our online trading platform is designed to make your investment journey seamless. What is trading in the futures? A Futures contract is a legal agreement to sell and buy a certain commodity, asset, or security at a certain price and date in the future. Futures contracts are standardized to make it easier for people to trade on the futures exchange. This is done to check for quantity and quality. The person who buys the futures contract has to buy or receive the underlying asset before the futures contract ends. The seller of this contract is responsible for giving the buyer the asset that the futures contract is based on when the buyer decides to use the futures contract. Future contracts let an investor guess which way a commodity, security, or financial instrument, which is the underlying asset, will move. When these contracts are bought, they are often done so to protect against losses from price changes in the underlying asset that are not good. Futures Contract Futures contracts are derivative financial contracts in which both parties agree to buy or sell an asset at a certain date and price in the future. Futures Trading is the process of trading with Futures Contracts. To follow the rules of futures trading, a buyer must buy the underlying asset while a seller sells it at a set price, no matter what the current market price is or when it expires. Future contracts also list the standard amount of the underlying asset, which makes trading on a futures exchange easier. People talk about the same thing when they say "futures" or "future contract." For example, someone may say that they bought oil futures, which is the same as saying they bought an oil futures contract. When someone talks about a "future contract," they are usually talking about gold, bonds, oil, or Nifty 50 index futures. Futures and forwards contracts Futures is a very broad term that is often used to talk about the whole market. Futures contracts are standardised, which is different from forward contracts. Forwards and forward contracts are both ways to lock in a price for the future in the present. Forward contracts are bought and sold over-the-counter (OTC) and have terms that can be changed. On the other hand, a futures contract will have the same terms for selling and buying, no matter who it is with. In the following blogs, we will look at futures trading in greater detail. We know you need the best trading platform, At Zebu, as a share broker company we offer just that. Our online trading platform is designed to make your investment journey seamless.

Reasons Why You Should Be Trading Options

At least in India's equities markets, options trading has clearly matured. In terms of daily volumes, options are not only liquid, but they are also many times larger than the cash and futures markets. We'll look at the advantages of options trading, as well as the benefits of option trading for both buyers and sellers. Here's a quick rundown of the advantages of trading options. While Options Trading has multiple benefits, trading using Zebu’s online trading platforms has its own set of benefits. We offer the lowest brokerage on intraday trading and are one of the best share broking company so we can make your investment journey seamless. Benefits of Options Trading Hedging risk is possible with options trading. If you are buying stocks of a company and purchase a put option for the same underlying, for example, your risk is minimised. If you are long a stock at Rs. 1000 and buy a Rs. 900 put option at a premium of Rs.10, your maximum loss will be Rs.110. That is the strength of options, since no matter how low the price drops, you will only lose a set amount of money. Options can assist you in lowering the cost of keeping a stock. For example, if you're holding stock and the price isn't changing, you can sell greater call options to earn the premium and lower your asset's cost of ownership. Options are far more cost-effective in terms of costs, which is one of the key advantages of options trading. The trader might establish an options position with a little margin because of options. For example, an investor must pay Rs.20,000 to purchase 100 shares of a stock at a price of Rs.200. However, if he purchased equal-weighted call options, the premium required would be roughly Rs 5,000. Options have the potential to provide huge returns, or a multiplier effect. Here's how to do it. If the strike is picked correctly, the option pays the same profit as straightforward stock buying. Because we are obtaining options at a lower margin while maintaining the same profitability, the percentage return would be significantly higher, at least in terms of ROI or return on investment. One of the major benefits of options is that they allow for the systematic transfer of risk from someone who wants to remove risk for a fee to someone who is willing to take on that risk for a fee. One of the most significant advantages of options trading is that it provides a genuine secondary market for risk, which is what distinguishes the options market. One of the most essential aspects of options is that they provide liquidity while also allowing price discovery in the underlying market. Options are a useful way of pricing complex risk characteristics, hence this is an important feature. The fact that the options-related data usually works as a lead indication is a significant advantage of the options. Data points such as option strike accumulation, changes in options interest across strikes, and significant spikes in implied volatility in options, for example, are all crucial leading indications of the future shape. Risks of Options Trading There are five disadvantages to trading options in general, and these are the same whether you are a buyer or seller of options. When naked options are sold, the potential losses might be enormous. As a result, vigilance is advised. Furthermore, even if you are buying options and frequently see your options expire worthless, it can reduce your trading capacity. Options pricing, option valuations, options trading, and other complexities make this a difficult trading landscape. Many traders are unaware of the basic hurdles of options trading and are quick to jump in. With Nifty or Bank Nifty options, or even very liquid stock options, liquidity may not be an issue. However, in mid-cap equities where options are authorised, liquidity is unquestionably a problem. If you're working on a complex strategy, costs will be multiplied. Then there are statutory charges, exchange costs, tax costs, and so on, all of which must be taken into account. Time decay benefits the seller of the option but puts the buyer at risk because the option loses time to value with each passing day, even if the price isn't changing much. As we mentioned earlier, trading using Zebu’s online trading platform has its own set of benefits. We offer the lowest brokerage on intraday trading and are one of the best share broking company so we can make your investment journey seamless.

Benefits Of Trading In Index Futures

A futures contract on a sectoral or market-wide index is called an index future. On the NSE, for example, you can buy futures on the Nifty, which is a market-wide index, and liquid futures on the Bank Nifty (which is a sectoral index of liquid banks). Both of these indices are very liquid, and both individual and institutional investors trade them a lot. Why have index futures in India become so popular? Why would you want to trade in index futures? Index futures trading in India grew out of stock futures trading, which was similar to the old Badla system on the BSE. In addition to looking at how to trade index futures, let's look at how traders can actually benefit from doing so. As one of the top brokers in the share market we understand the concerns with brokerage fees and offer lowest brokerage for intraday trading and the best trading accounts for our users. 1. You can look at the whole and avoid stock risk Let's say you've decided to buy banking stocks, but it will be hard to figure out which ones to buy. While NPAs may be a problem for PSU banks, valuations are a problem for private banks. A better idea would be to look at the whole banking industry, which will give you a natural way to diversify. You can do this by buying Bank Nifty Futures and taking part in the rise of banks. The benefit is that you can keep your position open as long as you want by rolling it over each month for a small fee of about 0.50 percent. 2. You can trade in both long and short directions It's fine if you're betting that banking stocks will do well. But what if you think banks are bad? If you own banking stocks, you can sell them or sell them short on equity markets. But because Indian markets use rolling settlements, you can only short stocks for one day. The other option is to sell stock futures of certain banks, but this also comes with risks related to those banks. All of these problems can be solved by selling the index futures for Bank Nifty. If you think the Indian markets as a whole will go down, you can just sell Nifty futures. 3. The margins for trading index futures are lower Always keep in mind that trading in futures is all about trading on margins. But the margins on indices like the Nifty and the Bank Nifty tend to be lower than the margins on individual stocks. Because an index is a group of stocks, it offers a natural way to spread out risk. This is shown by the fact that less risk is needed to take a position in index futures. This will make sure that the amount of money that is locked in is also less. 4. With index futures, you can reduce your risk This is a very important part of how you manage your portfolio. Whether you invest on your own or through a company, you may have a large portfolio of stocks. Once the US Fed raises rates, you think the market will fall. At the same time, you are sure that the drop in your stock prices will not last long and that they will go back up in the next few months. You could just keep your portfolio, but it would be better to sell Nifty futures to spread out your risk. When the market goes down, you make money on Nifty futures, and these profits will help you lower your average cost of holding equity. After 3 months, you will definitely be better off. 5. Very liquid There are often problems with the way certain stocks or stock futures trade. On the other hand, index futures rarely face liquidity risk because institutional investors like to use them. Because of this, the bid-ask spreads are also very small. This makes it pretty safe to trade in these index futures, since you won't get stuck for lack of liquidity. This is one of the main reasons why trading index futures is good. 6. Index futures can help you diversify If you have a portfolio that is mostly geared toward financial stocks and you think there is some risk because RBI is raising interest rates, so you want to add safety by investing in non-cyclical sectors like FMCG and IT. Buying these stocks is one option, but it will cost money and lock up funds if the opportunity is only for a short time. A better way is to add index futures for the FMCG index and the IT index to your portfolio. This will help you diversify your portfolio's structure with little risk and money. 7. It costs much less to trade index futures. Index futures have much lower commission rates and STT rates than equities or even stock futures. In fact, most brokers will also offer you fixed brokerage packages on indices, which makes them cheaper than stock futures as well. Make the most of the fact that index futures cost less. This is why index futures are a great way to trade with less risk and a higher chance of making money. As we mentioned earlier as one of the top brokers in the share market we understand the concerns with brokerage fees and offer lowest brokerage for intraday trading and the best trading accounts for our users.

Who Are The Market Participants Of The Futures Market?

A market is strong not only if there are products to trade and a way to keep things in check, but also if the people who take part in it are good. The same is true of the futures market for commodities. Even though there are thousands of traders who buy and sell precious metals, industrial metals, and agricultural goods, these traders and market participants can be put into four main groups. This sorting is very important because each of these types of market participants leaves its own mark on the market and adds to its strength in its own way. Are you looking for the best trading platform? Then your search ends here with years of experience as a share broker, our team at Zebu has come up with the best stock trading platform for our users. 1. Speculators on the commodity market The time that speculators are on the market is very short. They might want to get out of their long or short position the same day or in a few days. They make money by understanding global economic cues and determining which commodity will go up or come down. In the equity derivatives market, speculators are also often called intraday traders. Most speculators don't care which way the market is going and are willing to trade both ways, that is, on the long side and the short side. Speculators usually try to be on the right side of the market's overall momentum and the momentum of the commodity they are trading. Since speculators depend a lot on small trading opportunities in the commodity markets, they use technical charts, supports, resistances, break-outs, patterns, etc. to help them make their trades. Speculators play a very important role in the commodity markets because they keep the markets liquid and make sure that the bid-ask spread is as small as possible. 2. Margin traders who trade in the direction of the market When it comes to certain commodities, these traders have a slightly longer-term view than speculators, who usually work at the short end of the market. Since margin trading is possible in the futures market, traders use futures as a stand-in for buying the commodity on the spot market. Instead of locking up all of their money in a spot position, traders who pay a margin use futures as a stand-in for spot positions. Margin traders are not only willing to wait until the contract ends, but they are also willing to take a longer-term contract and pay the rollover cost to keep the position open. Margin traders usually don't put too much stock in technicals, but they have a strong fundamental premise that makes them willing to pay the roll cost to keep the position open for longer. Most of the time, the trades of these margin traders give traders and analysts hints about which commodities are getting long-term interest and are a leading indicator of changes below the surface. 3. Spot / Futures Arbitrage Traders Arbitrage traders do something very different in the commodity markets. By trying to lock in spreads, they actually try to make the prices on the market fairer. Before we can figure out how arbitrageurs work in the commodity markets, we need to know how they do business in the stock markets. If JSW Steel is quoted at Rs.500 in the spot market and Rs.510 in the stock futures market, the arbitrageur will buy JSW Steel at Rs.500 in the spot market and sell JSW Steel Futures at Rs.510. So, he can be sure of making a profit of Rs. 10 till the price gap is bridged. On the day of expiration, both the spot position and the futures position will end at the same price, giving the arbitrageur the chance to make the 2% spread. The markets for commodities can be a bit more complicated. First of all, different agencies control the spot market and the futures market for commodities, which makes things more complicated. Second, unlike stocks, commodities have extra costs like shipping fees, insurance costs, storage fees, stamp duty, etc., which all need to be taken into account when figuring out the spread. But when all of these costs are taken into account, if the arbitrage spread on any commodity is positive, the arbitrageur will buy in the spot market and sell in the futures market. By fixing any problems with prices, the arbitrageur will not only be sure to make a profit, but he or she will also make the market work better. Arbitrage takes a lot more time and money than speculation or trading on margin. 4. Hedgers Hedgers are people who have an underlying exposure to a certain commodity. Let's say you have a big order of silver that you need to give to a jeweller in 3 months. The only problem is that the deal will be made at the price that was in effect on that date. This puts you at risk for price changes over the next three months. You're happy with the price of silver right now, but you're worried that it might go down in 3 months. You can protect yourself by selling short 3-month silver futures. By doing this, you're securing your position at a price that seems good to you at first. So, you don't care what happens to the price of silver over the next three months. If the price of silver goes up, you will lose money, but that is what a speculator does. As a hedger, it is your job to protect yourself from losing money, which you have done well. Hedgers are traders who have real exposure to the underlying market. Because of this, they make the commodity markets more stable and trustworthy. These are the four main participants of the commodity markets. The direction and health of the commodity markets are determined by what these four people do together. Your search for the best trading platform? With years of experience as a share broker, our team at Zebu has come up with the best stock trading platform for our users.

5 Things To Keep In Mind Before Trading In Futures and Options

Those who want to become derivative traders have a lot to gain from trading options and futures. Most of the time, people jump into FnO trading without knowing how it is different from trading on the spot market. If you've been thinking about trading futures and options, here are 5 things you need to know before entering the derivative markets. The best way to keep a track on your losses is to have the right tools in place and as one of the experienced brokerage firmsin India we have the best trading accounts for our users and offer lowest brokerage fees. 1. Your losses aren't limited to the money you put up as a margin When you trade on the spot market, the most you can lose is the amount of money you put in. In futures trading and options trading, on the other hand, you pay margins that are a lot smaller than the amount of capital you are putting at risk. This makes it easier to lose track of how big your possible loss really is. Before you start FnO trading, it's helpful to remember this. 2. Liquidity is easy to forget about When they first start trading options and futures, many traders don't realise how important liquidity is. So, be careful not to make the same mistake. Even though it's important to have a good options trading strategy or futures trading strategy, it's just as important to make sure that the derivatives you're trading in are liquid enough to support an exit. 3. Moneyness of options This is something you really need to know before you start trading options. Out-of-the-money (OTM) options may be cheaper, but they often aren't liquid enough, which is a big problem. So, the best chance isn't always the one that costs the least. Make sure you find a good balance between affordability, profit, and cash flow. 4. You can use FnO trading to hedge There are risks that come with trading in FnO. Beginners should always use a futures trading strategy or an options trading strategy along with a regular trade so that the FnO trade can protect the regular trade. This way, you can lessen the risk and learn more about how the derivative market works at the same time. 5. Trading plans are important In derivatives trading, FnO trading strategies are very important. Different plans work best in different situations. For example, you can use covered calls if you're worried about how much it will cost to keep a call on hold. On the other hand, if you want to make more money if the price goes down, you can use protective puts. Also, keep in mind that complicated and multi-layered plans are usually more expensive. So, before you start trading FnO, make sure you remember these things. For beginners, it's helpful to have a reliable tool or platform to use, especially when it comes to making and analysing strategies. Here, our advanced options trading platform, Zebull, can come in handy. If you want to get into the derivatives market, you should check it out and use the helpful features. Don’t lose out on a chance to have the right tools in place, as one of the experienced brokerage firms in India we have the best trading accounts for our users and offer lowest brokerage fees.

The Basic Rules Of Day Trading You Should Know

Day trading is a way to trade stocks that is both risky and profitable. Day trading, which is also called intraday trading, is when you buy and sell stocks during the same trading session. Here are some basic intraday trading tips you can use if you want to use this strategy to make money on the stock market. Before we get into the rules, the basic rule of trading is to use the right tools — as a share trading company we understand this better than anyone and are here to offer our customers the best Indian trading platform along with the lowest brokerage options. 1. Choose the best stocks When you start day trading, the first and most important thing you should do is choose the right stock to buy. Not all stocks are good choices for trading during the day. Since you would be buying and selling them during the same trading session, you would need to choose stocks with a lot of liquidity, which will make buying and selling them easier. Large-cap stocks and mid-cap stocks are usually the best choices for day trading because they have a lot of buyers and sellers. 2. Set prices to enter and exit the market Once you've decided on the stock you want to trade, the next step is to set entry and exit prices. Going into a trade without any goals is a sure way to lose money. Set a price at which you want to buy the stock and stick to it, even if it means you might not be able to buy it. Set a goal for when you want to sell the stock, even if it means you might miss out on any gains the stock might make in the future. 3. Don't forget to set stop loss After buying the stock, the first thing you should do is set a stop loss. This will keep you from losing a lot of money if the stock moves in a way you didn't expect. Let's say you buy a stock for Rs. 100 with the hope that it will go up. But as a safety net, you set a stop loss at Rs. 97. Now, if the stock goes against your expectations and drops to Rs. 97, the stop loss will be triggered, and your stock will be sold at a loss of Rs. 3. You will also be protected if the price goes down even more. 4. Always follow the trend This is one of the best tips you can use when trading during the day. If the market is going up, it's a good idea to buy stocks. And if it is bad, it is best to sell stocks. Contrarian views on the market are never a good idea because they can backfire. For example, many people short-sell stocks when the market is bullish because they expect the price to go down. These kinds of changes don't happen very often. Conclusion Even though intraday trading is riskier than regular trading, when done right, it can be one of the most profitable ways to make money consistently. So, if you want to do day trading, you must have both a trading account and a Demat account. Get in touch with us right away to start trading stocks. As a share trading company, we understand this better than anyone and are here to offer our customers the best Indian trading platform along with the lowest brokerage options. Want to try out our tools? Get in touch with us.

What is Algo Trading and How Does It Work?

Algorithms are everywhere. From our smartphones to laptops to anything with technology, algorithms power the functionality of billions of entities. With the rise of more advanced technologies, this piece of logical code is now used in almost every field. Algorithms use user data, patterns from the past, and a set of instructions that have already been decided on to reach their goals. Mutual Fund companies, for example, use an algorithm to take the set amount out of your bank account every month for a SIP Algorithms are used in the virtual transaction system to make sure that trading is clear, that users have a good experience, and that there aren't any hiccups or delays. But depositories and stockbrokers aren't the only ones who use algorithms. Traders use algorithms to avoid mistakes made by retail traders and increase their chances of making money. Algorithmic Trading or Algo Trading is the name for this process. Before we get into what is Algo trading it is important that you understand that it requires a powerful tool. As a share broker company, we understand the requirements of an avid trader and offer a seamless . online trading platform with the lowest brokerage options. How does algorithmic trading work? Algorithmic trading is a way to trade quickly on the financial market by using trading instructions that have already been programmed. Traders and investors use trading software, which they tell what to do based on time, volume, and price. When the market triggers the set instructions, the investor's orders are carried out by the trading software. In general, Mutual Funds, Hedge Funds, Insurance Companies, Banks, etc. use algorithmic trading to make a large number of high-volume trades that would be impossible for humans to do. Algorithmic trading lets investors make more deals in less time without human emotions and mistakes. Take a look at the following example to better understand what algo trading is. The following set of instructions can be given by an investor for algorithmic trading to take place: Instruction 1: Buy 200 shares of XYZ company if the price goes above its 15 minute high. Now, if the price of a share goes above the 15 minute high, the algorithmic trading system will automatically place an order for 200 shares of XYZ company. But the algorithmic trading software won't do anything with the order unless the conditions are met. Instruction 2: Sell 200 shares of XYZ company if its 20-day moving average falls below the 200-day moving average on the 5-minute time frame. In this case, the algorithmic trading software will sell 200 shares of XYZ company if its 20-day moving average falls below its 200-day moving average.. If it doesn't, the order will not be executed. For algorithmic trading to work, each set of instructions must be carried out only once. For example, in Instruction 1, the algorithmic trading software will place a buy order if the price stays above the 15-minute high for even a few seconds. After those few seconds, the price might drop back below the entry point and develop a loss. But the order would have already been placed as soon as the conditions are met. Algo trading has come a long way in India and is all set to reach greater heights. You can simplify your trading system or add as many data points to it as you want but it is crucial to understand its working and monitor it closely. As we mentioned earlier Algo trading requires a powerful tool. As a share broker company, we understand the requirements of an avid trader and offer a seamless online trading platform with the lowest brokerage options.

Benefits Of Algo Trading

An algorithm is the core of every computer programme and how it works. With the rise of new technologies, the effectiveness of almost every sector is based on this piece of logical coding. Algorithms use user data, patterns from the past, and a set of instructions that have already been decided on to reach their goals. In the financial world, the need to lower transaction costs is driving more people to want to use algorithms in everything from customer service to trading stocks. When you trade with algorithms you need to have a powerful technology to support you and we understand that. As one of the top brokers in share market, we offer the best trading accounts and the lowest brokerage for intraday trading. Algo-trading is the technology that changes the most quickly. It has amazing and smart features that make trading faster and better for market participants. Financial institutions like banks, brokerage firms, and investment funds use complex algorithms to open and close positions at lightning speed. This setup lets these institutions take advantage of small differences in real-time market conditions, which is harder to do manually. Algo-trading constantly watches markets and places orders when conditions match a set of parameters, such as volume, price, resistance, support, or any other factor that the trader or market participant is comfortable with. One of the benefits of algorithmic trading is that it can easily and quickly find a trend by using the data that is already available. If they can't analyse a large amount of data quickly, it's hard for market participants to act quickly. Market participants can also use more than one strategy at the same time and decide what the net result of the strategy will be. Let's look at an example to see what I mean: if a market participant has used 10 different strategies on one stock, the system will suggest other ways to trade that stock. If 7-8 of these 10 strategies give buy signals, the trader will buy the stock. Most of the strategies are giving buy signals, so it makes sense to think that the strategy will be good. Algo trading uses technology and computers to make trade decisions, which can be hard for traders who don't know much about the financial markets to do on their own. Trading automation is a great way to try out different strategies and automate boring tasks to get results faster. Also, the use of algorithms in financial services is likely to create growth opportunities in the near future that will be very profitable. There is no doubt that algorithmic trading will be used more often, especially now that platforms exist to make complex technologies easier for everyone to understand. When trading with algorithms you need to have a powerful technology to support you and we understand that. As one of the top brokers in share market, we offer the best trading accounts and the lowest brokerage for intraday trading.

Types Of Strategies You Can Use In Algo Trading

Algorithmic Trading is something that investors use in many different ways. Here are some of the most common. As an online share broker, we understand the need for an efficient online trading platformand we offer our customers just that. Also, get in touch with us for the lowest brokerage options. Rebalancing: Index funds constantly change their holdings to match the current market price of the asset they track. So, they give algo traders chances to take advantage of the trades that are expected and make money from the difference of 20–80 basis points. Most of these trades happen when an index fund rebalances are done through algorithmic trading. Trend Following: This is the type of algorithmic trading that algo traders do most often. In this process, they use moving averages, price changes, channel breakouts, etc. to make a set of instructions for the algorithmic trading software. Arbitrage: It is when you buy a stock at a low price in one market and sell it at a high price in another market at the same time. You make money from the price difference. Investors use data to find stocks that are trading at different prices and then use algorithmic trading to place buy and sell orders in both markets. Mathematical Model: Investors trade on the stock and derivative of the same underlying asset by using mathematical models that have been tested and shown to work. Since this can be a complicated set of trades, they use algorithmic trading to find these assets and place orders across different asset classes based on price changes. Mean Reversion: This strategy tries to take advantage of an asset's temporary highs and lows. If given enough time, the asset price will always go back to its average value (average price). VWAP: Investors use algo trading to set a price range for an asset and make sure it automatically buys or sells when the price goes in or out of that range. Investors seek to execute orders as close as feasible to the VWAP. With algorithmic trading, investors can break up large orders into smaller pieces that change over time and make sure their closing price goals are met. Please keep in mind that these are just a few of the strategies that you can use with algo trading. Apart from this, you can also trade breakouts, chart patterns and price actions as well. As we mentioned earlier as an online share broker, we understand the need for an efficient online trading platform and we offer our customers just that. Also, get in touch with us for the lowest brokerage options.

How To Get Started With Algo Trading

As a regular investor, here's how you can start Algo trading. As top brokers in share market , Zebu, allows you to use algo trading for free, along with offering the lowest brokerage for intraday trading options and proving users with the best trading accounts 1. Learn about the market Before you do any kind of trading, you need to learn about the market. Before you start Algo trading, you should learn as much as you can about the instrument or market you can trade in. This will help you come up with a hypothesis that you can use to guide your trades. 2. Know how to code If you don't know how to code, you can learn a language like Python and make an algorithm that works for you, or you can pay a professional to do it for you. 3. Backtesting You must test your algorithm before putting it into use. Back-testing is a way to make sure that your strategy will work in the future. You can also use software from a third party to check if your algorithms work. You can change your code based on whether or not they work. 4. Decide on the Best Platform As crucial as your coding is, you must also choose the correct broker and platform. Choose a broker that supports your algorithm and gives you a variety of tools to help you improve your trading strategy. For example, at Zebu we offer a free algo-trading provision that traders can use to execute their trades. If you would like to know more, please get in touch with us. 5. Go Live When you're happy with your algorithm, take it live. Monitor its market and real-world performance. Your algorithm might not always work. You might then have to start over or make changes to fit your needs. 6. Keep Evolving Even if your first strategy doesn't work, you don't have to give up on algorithmic trading. Keep trying out different codes to see what works best. If you don't have the time or skills to make your own algorithm, you can buy Algo software that will do the job for you. Do your research, try out the strategies with past data, and choose the one that works best for you. Conclusion Traditional investors can boost their trading approach by trying Algo trading. You can take advantage of short-lived trading chances that you would have missed otherwise. Algo trading can help you become a good trader who is quick, efficient, and successful. Is algo trading costing you a bomb? Zebu, As top brokers in share market allows you to use algo trading for free, along with offering the lowest brokerage for intraday trading options and proving users with the best trading accounts.

What Exactly Are VAR And SPAN Margins?

VaR and SPAN margins are related to every position you take in the stock market, especially if you trade in FnOs. But what exactly are they and how can you calculate them? Here’s everything you need to know. VaR is a way to measure the risk of a loss. Value-at-risk, or VaR, is a way to measure the downside risk or potential loss of a portfolio or investment over a certain amount of time. It helps analyse and estimate how much the minimum loss can be with a certain amount of confidence. Essentially, it is a number that tells you how risky a portfolio is. For example, VaR can tell us that an investor can expect to lose at least 2% of the total value of their portfolio on 1 out of every 15 days. So, it helps figure out how much money could be lost, how likely it is to lose that much money, and how long it could take. Statistical simulations can be used in a number of ways to figure out VaR. The risk management department of a company keeps a close eye on this parameter and tries to make sure that extremely risky trades are not taken. Margin SPAN On the equity markets, traders also need to have a certain amount of money set aside as "margin money" to help cover trade losses. But it is hard to guess how much of a margin is needed to cover all the losses if the market shows the worst-case scenario. As a result, the SPAN, which stands for Standardised Portfolio Analysis of Risk, is a standard way for traders to figure out how much margin money they need. When figuring out margin amounts for every single position, the SPAN system uses complicated algorithms and machine learning techniques. Each margin amount is equal to the most a single account can reasonably lose in a single trading day. It was made by the CME in 1988, and more than 50 exchanges around the world use SPAN as their official way to figure out how much margin they need. This margin is different for each security because each one comes with a different level of risk. For example, the SPAN margin for a single stock will be higher than that for an Index because single stocks are more risky and volatile. Risk management Every trader who is successful knows how important it is to manage risk, which is even more important than making money. With the help of VaR and SPAN calculations, a trader can keep a large number of contracts in their portfolio and stay away from serious margin calls. More brokers and financial institutions are now focusing on better ways to handle risks. Many of them require that, in addition to SPAN margin, which is collected when trades are started, an additional margin called Exposure margin to be collected to protect against liabilities caused by wild swings, rogue trades, or reactions to extreme stress in the market.

Ideal Timeframe For Intraday Trading

Intraday trading often proves that taking fewer trades gives you better profits. Instead of buying and selling stocks the whole trading day, it might be smart to do intraday trading only during a few key hours. In fact, traders who work with stocks, index futures, and ETFs have found that it's better to spend one to two carefully chosen hours a day on trading. The ideal time-frame for intraday trading Long-term intraday traders will do well to find the best time frame. Using these hours can help you get the most done because they are when important things happen on the market. On the other hand, people who trade all day have little time for other things and don't make enough money. Even intraday traders who have been doing it for a long time can lose money if they trade outside of the best time frame for intraday trading. This raises the question: what is the best time frame for intraday trading? Most say that it is between 9:30 and 10:30 in the morning. Should you buy or sell within the first 15 minutes? Intraday trading is best done in the first one to two hours that the stock market is open. But in India, most stock market trading channels don't open until 9:15 a.m. Why not start at 9:15 instead? If you have been trading for a long time, trading in the first 15 minutes might not be as risky. For people who are just starting out, it's best to wait until 9:30. This is because, in the first few minutes after the market opens, stocks are probably reacting to the news from the night before. A trade will often show sharp price movements in one direction. This is nicknamed the "dumb money phenomenon" because people rely on old news. Traders with a lot of experience may make some good deals in the first 15 minutes. They are mostly mean reversal traders. Beginners who have never heard of "dumb money" or the strategy that experienced traders use to fight against it will think the market is very volatile. So, it's better to wait until 9:30 than to jump in at 9:15. Trading at the open Not all moves are bad. After these first extreme trades, the market will have the right amount of volatility for beginners. Since this is the case, the best time to trade is between 9:30 am and 10:30 am. There are many benefits to intraday trading in the first few hours after the market opens: The first hour of the day is usually the most volatile, giving you plenty of chances to make the best trades of the day. The market is liquid enough to get in and out of during the first hour. Since there is more volume, liquid stocks are likely to be sold off faster. – It has been shown that the stocks bought or sold in the first hour make some of the biggest moves of the whole trading day. If you do it right, it can give you the best returns of any time during the trading day. But you should also prepare for large losses in the first hour due to volatility. – After 11 a.m., trades usually take longer and involve fewer people, which is bad for intraday traders who need to finish their deals by 3:30 p.m. If you need more time, it would be a good idea to keep this session going until 11 a.m. But day trading is a better fit for the strategy of only trading in the first hour. Think about the bigger picture. The range of 9:30 to 10:30 is not a rule that every trader must follow. It's good for beginners in general, but you can change it to fit your needs. It's smart to think about the bigger picture. For example, one strategy for intraday trading is to keep the day of the week in mind along with the best time frame. Monday afternoon is often a good time to buy on the market because prices tend to go down at the beginning of the trading week. Experts say that you should sell on Fridays, right before the drop on Monday. Also, not every trader needs to do something during that first hour. People who usually make more than one trade in a day can choose a shorter time frame. Intraday traders who only make a few trades each day can choose a longer time frame instead. Traders with a lot of experience may also change their time frame on different days, depending on how busy they are.

How To Trade On The Expiry Day

Futures and options for the month end on the last Thursday of each month on the Indian stock market. Traders must close out their positions by the expiration date or before. In recent years, both the Nifty Index and the Bank Nifty Index have had weekly expirations. Every Thursday, the weekly contracts end. Active traders can make a lot of money with weekly expirations. If the stock market is closed on Thursday, the last trading day is the day before. Trading options on the day they expire is extremely unsafe also. You need to know the right way to buy and sell options and the right range for when the market will end. Here is how to do it. How to trade on expiration day When you trade options, you can choose to trade close to or on the expiration date. You can use different expiration trading strategies to get the most out of options contracts. If you know how to use expiry day trading strategies, it's not hard to trade options close to their end date. When trading stocks or futures, most trades have a direction. Options trades, on the other hand, are bets with no clear direction. Since there is no need to accurately time entries, the effect can be very big. There is a chance of making a mistake, which can be very helpful. The market is very volatile on expiration day, making it a very important day to trade. If you use a chart to trade, you might get tossed around on the expiration date. The trend-following indicators can tell you to buy, but on the next bar, the market starts to go down. The same goes for the sell signal. It's common to lose money on the expiration date. But if you know how to trade well, you can also make a lot of money. People compare the stock market to a sword. You need to know how to handle it. With the expiry day Nifty options trading strategy, you can turn 1 Rupee into between 20 and 50 Rupees, and sometimes even 100 Rupees or more. That's how the strategy for Nifty options with an expiration date works. You don't have to be a professional technical analyst to trade Nifty on the day it expires. You just need to know when Nifty is going to run out. However, most of the hero-or-zero positions turn out to be zero, even for the most experienced traders. If you want to be good with your money when trading on expiration day, don't trade more than 2% of your capital. The most you can lose is the amount you paid for the option's premium. If you hold on to the options contract and they expire without being worth anything, you will lose the full premium, plus any taxes and brokerage fees. So, you have to close out your position in the options before the date they expire. How the end date affects the price of a stock The date that an F&O contract ends is called the settlement date. Because of this, the stock market has a lot of ups and downs. Depending on how the derivatives contract is settled on the expiration date, the stock market can become bearish or bullish. Arbitrage trading is another thing that can change prices on the stock market close to the expiration date. In arbitrage trading, F&O traders look at the performance of the contracts' underlying assets before they expire. To make the most money, many futures and options traders trade on the secondary markets. Wrapping up Before you start trading futures and options, you should know when the contracts you buy will end. Your contracts are settled based on their expiration dates, so it's important to know what happens on those dates. Also, every stock trader needs to know how the expiration date affects the whole stock market. Depending on how volatile the market is near the expiration date, an investor can make short-term profits or not trade at all to limit losses.

5 Skills That Every Trader Should Have

There are many ways to become a professional trader, and a person needs a lot of skills to do well in a field with a lot of stress and competition. When financial firms hire people for trading jobs, they usually look for people with degrees in math, engineering, and hard sciences instead of just people with backgrounds in finance. There are also different kinds of trading jobs, some of which require communication skills with customers as well as knowledge of charts. So, let's take a look at some of the skills that all traders need. Skill at analysing Every trader needs to be able to look at data quickly and figure out what it means. Trading involves a lot of math, but charts with indicators and patterns from technical analysis show what the data means. So, traders need to improve their analytical skills so they can see trends in the charts. Research Traders need to have a healthy thirst for information and a desire to find all the important data that affects the securities they trade. Many traders make schedules of economic reports and news that affects the financial markets in a way that can be measured. By keeping up with these sources of information, traders can act on new information while the market is still processing it. Focus Focus is a skill, and the more traders use it, the better they get at it. Because there is so much financial information out there, traders need to be able to focus on the important, actionable information that will affect their trades. Sector-based traders also focus on one particular industry. This helps them learn more about a certain sector, industry, or currency, which gives them an edge over traders who don't specialise as much. Control Control and, more specifically, self-control go hand in hand with being able to focus. A trader needs to be able to keep their feelings in check and stick to a plan and strategy for trading. This is especially important when using stop losses or profits at set points to manage risk. Many trading strategies are made so that the trader loses less when things go wrong and makes more money when things go right. Strategy goes out the window when traders start to get emotional about their trades, whether they are good or bad. Keeping a record Keeping good records is one of the most important parts of trading. If a trader keeps careful records of how his or her trades turn out, all that's left to do to get better is to try out different strategies and change them until one works. If you don't keep good records, it's hard to show real progress.

What Is All The Hype About A Trading Edge?

What Is All The Hype About A Trading Edge? In theory, a trading edge is a strategy, observation, or special technique that gives a trader an edge over other traders in the market and helps them make more money. There are a lot of books and papers on different trading techniques, but since many people learn and use the same information, the chances that it will give a trader an edge quickly go down to almost nothing. Finding an edge and understanding what that really means can help you decide if it's worth your time to look for one or if it's even possible or useful. The Common Thought Most people think that an edge is something that a trader knows or uses that gives them an advantage over the market or all the other traders. For example, a trader might think that using a certain indicator (like the Relative Strength Index, or RSI), in a certain way (like making short trades when the RSI is above 84), gives them an advantage over traders who don't use the same indicator in the same way. Many new traders spend years trying out different indicators or different settings for indicators (like a length of 10, then a length of 15, etc.). They also try out different chart settings, like time-based charts, tick-based charts, or volume-based charts, to find the combination that gives them an edge. Getting Your Way Some traders have never heard of the term "edge." When they do, they might start to wonder if they have an edge or if they need to find one. A few rules can help traders find trading edges, if there are any: The edge must be based in reality and can't be based on assumptions. A trader needs to know that an edge might not work all the time. It is possible to make a lot of money with an edge, but then the edge might stop working for a while. If you think you have an edge, you should test it by clearly defining the rules and then applying them to historical market data and "paper trading." A wake-up call In reality, there are traders who think they have an advantage and traders who think they need an advantage. Some traders laugh every time someone talks about an edge while they make another trade that makes them money. In other words, you might find and use an advantage or you might not. Many traders think that good training and instruction give them an edge. In fact, this could be the edge that people looking for an edge are looking for. To trade well, you don't have to compete with the market or other traders. In fact, the opposite is true. Good risk management and a healthy dose of patience are more likely to lead to success in trading. Retail traders often do better when they focus on controlling their own decision-making processes instead of making decisions based on things they can't change. This is not what many new traders will say. If you are one of them, think about this: Traders who think they have an edge will never tell other traders what trade they are about to make. These traders think that if they talk about it, they might lose their edge. Professional traders, on the other hand, won't think twice about telling other traders what trade they are about to make. This is because it doesn't change the potential of the trade if other traders know about it or make the same trade. Prices can change over time based on supply, demand, and investor sentiment as a whole, but just because one investor thinks they have an edge won't change anything. If you are a new trader who is just starting to look for your edge or if you are an experienced trader who has been looking for your edge for years, you should stop. Markets change so quickly that an edge you find today is likely to be useless tomorrow. In the short term, looking for a trading edge might help you make quick money, but it's more likely to waste your time and cause you to miss out on opportunities and money.

Factors That Decide An Option’s Premium

Factors That Decide An Option’s Premium Any trader will tell you that in order to be successful, you have to understand and, more importantly, master the concept of option pricing and how to figure out its correct value. When you look at all the things that affect an option's price, you can figure out what its real price is. Let's look at oil as an example. The final prices of petroleum depend on consumer demand, the price of crude oil, the time of year, local and state taxes, refinery output, etc. If you want to know or figure out the price of an option before you buy or sell it, you can use a mathematical model like the Black Scholes model. You only need to think about the different parts of the model to figure out the right price. Being a successful trader depends on several things, but most importantly it depends on the kind of platform you use to trade. As a stock broker, we understand this and offer the best trading platform to our users that provides them with the best trading accounts. Putting a price on an option depends on a number of things. The stock's current price: If you're interested in a call option that lets you buy shares of X company for, say, Rs 350 each, you'd probably be willing to pay more for that call when the stock is trading at Rs 320 instead of Rs 350. This is because the call option gets much closer to being ITM at Rs 49 than it would have been if it traded at Rs 40. Put options, on the other hand, do the opposite. The Strike Price: This is the price that a call owner has to pay to buy stock, while a put owner has to pay if he wants to sell his stock. This is like the example that was given above. Most of the time, it costs more to get the right to buy stock at Rs 350 than at Rs 380. The average investor would, of course, like to have the right to buy stocks at lower prices at any time of day. With the strike price going down, this makes calls cost more. In the same way, the value of puts goes up when the strike price goes up. Time before expiration: It's important to remember that all options have a set amount of time they can be used and usually end on or after a certain date. Because of this, the value of an option goes down as time goes on. The more time there is until expiration, the more likely it is that you can make moves that will make you money. Interest rates: This is not a very important factor when figuring out the price of an option. When interest rates go up, so do the prices of call options. When the trader chooses the call option instead of the stock, any extra cash in his account should, at least in theory, earn him interest. This doesn't really happen in the real world, but the basic idea makes sense. Dividends: When a stock trades but the owner doesn't get any dividends, this is called "ex-dividend," and the price of the stock goes down by the amount of the dividend that was due. When dividends go up, put values go up and call values go down. Volatility is thought to be the most important variable. In simple terms, volatility is the difference between the prices of stocks from one day to the next. It can also be called swings in the price of a stock. When compared to stocks that are less likely to change, volatile stocks are more likely to have a different strike price level. When investors make big moves, their chances of making money go up. So, options on stocks that change a lot are definitely more expensive than options on stocks that change less or not at all. So, it's important to remember that even small changes in estimates of volatility have a big effect on the prices of options. Volatility is usually thought of as an estimate, and if you only have an estimate, especially of future volatility, it's almost impossible to figure out the right option value. As we mentioned earlier being successful as a trader depends on several things, but most importantly it depends on the kind of platform you use to trade. As a stock broker, we understand this and offer the best trading platform to our users that provides them with the best trading accounts.

Why You Should Know Time Value Before Trading In Options

When it comes to trading options, the time value of an option is one of the most basic and important things to understand. In technical terms, it is called "Theta," which shows how an option's value decreases over time. Before we get into the details of time value and time decay, let's take a quick look back at what options are and how they work. Before we get into understanding the importance of time value in trading, we should understand that the right technology is equally important. As a share broking company, we offer our clients a seamless online trading platform and also provide them with the lowest brokerage on intraday trading, to make their journey as a trader as smooth as possible. So, what are options really all about? As the word "option" suggests, it is a right that doesn't have to be used. Unlike a futures contract, which is both a right and a duty, this is not the case. The buyer of the option has the right to buy or sell the underlying asset at an agreed-upon price (strike price). If the price change goes in the buyer's favour, he will make money, but if the price change goes against him, he will not use the option. That doesn't seem fair to the person who sold the option, does it? Not at all! Since the person who buys the option has a right but no obligation, the person who sells the option has a duty but no right. The seller won't do that for free, that much is clear. The person who buys an option pays a certain fee to the person who sells the option for the right to do something without having to do it. This fee is called an "option premium," and it is what gets traded on the NSE when you buy and sell options. The buyer of the option pays the option premium to the seller of the option as a reward for taking on the obligation without the right. Options can be either "call" or "put." Call options give you the right to buy something, while put options give you the right to sell something. You buy a call option if you think the price of a stock will go up. If you think the price of a stock will go down, on the other hand, you will buy a put option. Even though it sounds easy, it's not as easy as it sounds. Getting to the heart of an option's intrinsic value and time value. Before you can understand the idea of time value, you need to know about the three types of options below. 1. An In-The-Money (ITM) option is a contract for an option that has an intrinsic value that is greater than zero. If the market price of the Nifty is higher than the strike price, a call option on the Nifty is in the money. If the market price of the 17000 Nifty call option is Rs.70 and the spot Nifty is at 17100, then the intrinsic value of the Nifty call will be Rs. 100 (17100-17000). The option's time value will be the remaining value, which is Rs.30. So, of the Rs.70 option premium that is being quoted on the market, Rs. 100 is due to intrinsic value and Rs. 30 is due to time value. If the spot price of the Nifty is lower than the strike price of the put option, the option is in the money. 2.An "at the money" (ATM) option is a contract for an option that has a value of zero. If the market price of the Nifty is the same as the strike price, it will be an ATM for a call option on the Nifty. Since there is no intrinsic value, the time value is the only thing that makes the option worth anything. 3. Out-of-the-Money (OTM) options are option contracts where the market price is lower than the strike price for a call option or higher than the strike price for a put option. According to our formula, the intrinsic value will be negative, but since the intrinsic value can't be negative, we'll treat it as zero. So, only time value will make up the option premium. At the beginning of the month, ATM options have the highest time value, followed by ITM options and then OTM options. In the long run, the time value of all three options will tend toward zero as the expiration date gets closer. Even though the OTM and ATM options themselves have no value, the option premium for ITM options will still be positive because they have intrinsic value. Why is time value such an important part of trading options? An option is a wasting asset because its time value tends to go to zero as its expiration date gets closer. This loss of time is also called "Theta." Time and volatility are two of the most important parts of time value. For both call options and put options, the time value goes up as the time to expiration goes up. Even if the option is still Out of the Money, a rise in volatility can cause the time value to rise. The person who buys the options bets that volatility will make the time value go up, while the person who sells the option hopes that the time value will work in his favour so that the option expires worthless. This is the main idea behind trading with options. As a share broking company, we offer our clients a seamless online trading platform and also provide them with the lowest brokerage on intraday trading, to make their journey as a trader as smooth as possible. Contact us to know more.

Here’s How Volatility Impacts Put and Call Prices Equally

What does it mean to say that something is volatile? Volatility, in simple terms, is a way to measure risk. But in technical terms, what does volatility mean? It can be thought of as the average difference between returns and the mean. Every investor wants a way to put their money to work that will give them predictable returns over time. When returns are too unstable, they can't be predicted. At that point, the asset is worth less than it did before. Investors usually don't like stocks that are too volatile, and those stocks tend to be worth less. But did you know that when it comes to options, it's the other way around? In fact, volatility makes both call options and put options worth more. As we all know the market is volatile, but your platform does not have to be. Zubu, one of India’s top brokerage firms provides our users with a seamless online trading platform that can help them create the best trading accounts. Usually, volatility and the prices of assets go in opposite directions. The risk is higher when the volatility is high, and when the risk is high, the returns are lower than expected. Investors are always willing to pay more for stability than for risk. But things are very different when it comes to call and put options. When the market gets more volatile, both call and put options are worth more. So, let's figure out why volatility makes the price of options go up. Let's also look at the relationship between how volatile an option is and how much it costs. How does this affect the implied volatility between a call and a put? First, let's look at what it means for call options. Volatility means that the stock's returns are likely to be very different from the mean. It also means that there is too much uncertainty in this situation. But why does that make the put option worth more money? Let's start by looking at the basic Black-Scholes model. According to the Black Scholes model, the price of an option is affected by 5 main factors: Market Price of the Stock: When the stock price goes up, the value of the call option goes up, but the value of the put option goes down. Strike Price of the Stock: When the strike price goes up, the value of a call option goes down, but the value of a put option goes up. Interest rates: When interest rates go up, the present value of the strike price goes down. This makes the call option more valuable and the put option less valuable. The value of a call option and a put option goes down if the time until maturity or expiration goes down. The value of both the call option and the put option increases when the stock's volatility increases. As you can see from the points above, volatility is the only thing that affects both call and put options in the same way. The time to expiration is the same, but it is a subset of volatility because a longer time to expiration makes people expect more volatility. But why does volatility have the same effect on calls and puts? It's not hard to figure out why. Both calls and puts on an option are not the same. This means that the person who bought the option will only use it when it is good and will not pay the premium when the price goes down. This rule is true for both call and put options. The risk of going up or down is high when volatility is high. When there is a risk of going down, the person who bought the call option won't pay the premium. When there is a chance of going up, the person who bought the call option will make a lot of money. Put options are also subject to the same rule. This is why call options and put options are worth more when the market is volatile. This shows that the value of the call option and the put option goes up when volatility increases, as long as all other factors stay the same. Zubu, one of India’s top brokerage firms provides our users with a seamless online trading platform that can help them create the best trading accounts. Visit us for more information.

How Traders Earn Passive Income From Cash Covered Puts

Futures and options are two types of derivatives contracts. They are used not only to protect the equity position but also to make a steady income. Many traders and investors combine futures, call options, and put options to make regular money from the stock market. They do this by using their holdings and balance margin to start trades. In this blog post, we'll look at how selling cash-secured puts can be used as a way to make money on the stock market. Are you a regular trader? Then, Zebu’s lowest brokerage for intraday trading plans is what you need. As a share broking company, we understand that the lowest brokerage plans can help our users tremendously. How do cash-secured puts work? As part of an option-selling strategy called "cash-secured put selling," you set aside enough money to buy a stock at a certain price and then sell the put option for that price. The goal is to buy the stock for less than what it is worth on the market. There are, however, some risks involved. The first risk is that the price of the stock may never drop to the level where the trader wants to buy it. This could make it impossible to buy the stocks in the long run. The second risk is that the price of the stock could fall way below the strike price. Why selling cash-secured puts is a good idea To make money from the option premium, cash-secured puts are usually sold. How much you get depends on the value of the security and how much you are willing to pay for it. Gains Invested Quickly Cash-secured puts can give you cash right away. It can make option income more appealing and can also help reduce risk. You can get paid to invest A cash-secured put strategy is a great way to get paid to buy the stock you want to buy. This strategy lets you choose from a number of strike prices and expiration dates. Low-dividend stocks can be profitable If you want to increase your cash flow but don't want to be limited by a low dividend yield, you can do so by selling cash-secured puts. Risks involved in this strategy Multiples of the Lot Size Futures and options, which are examples of derivatives, can only be traded in lots. This method won't help you if you want to buy stocks in a very small amount or a fraction of the lot size. Not being able to profit from price correction Most investors who want to own shares of a company in the long run shouldn't use the cash-secured put strategy. If the price of shares stays high, they may never be able to buy any. Repeated Actions Most investors are more interested in a simple "buy and hold" strategy. In this strategy, you sell cash-secured puts so that you can buy stocks when the person who bought the put options decides to sell. Since the option doesn't have to be used, it takes more time to go through the same process every time it expires. Effects on tax When you sell cash-secured puts, the money you make is considered business income and is taxed based on the trader's tax slab. If the trader owned the stock, he or she would get money from dividends and the increase in value of the stock. Together, these two types of income might have a lower tax rate. Getting to Know with an Example Let's say that the price of Stock XYZ is Rs. 250 right now. Stock XYZ's derivatives contract has a lot size of 100 shares, and you want to buy 100 shares of XYZ for Rs. 235. You can make money by selling the 235 strike price put option every month and keeping the premium. Let's say that for the current month, the premium for 235 put options is Rs. 8. You get Rs. 800 when you sell that put option (Rs. 8 x 100 shares). This means that you are willing to buy 100 units of the stock XYZ for Rs. 235 at the end of the expiration period if the price at that time is Rs. 250 or less. For this obligation to buy, you need to keep an account balance of Rs. 23,500 (Rs. 235 x 100 shares). If the stock price goes above Rs. 235, you get to keep the entire premium you got for selling the put option with a strike price of Rs. 2350. The Bottom Line: Cash-secured put selling is a strategy that involves buying a security at a price that you would be willing to pay. This method works for people who want to make more money or feel safer without spending too much. You might not want to sell cash-secured puts because the deal is complicated and you don't want to own the security. This strategy could be better for investors and traders who want to make money on the stock market without doing much work. If you are a regular trader then, Zebu’s lowest brokerage for intraday trading plans is what you need. As a share broking company, we understand that the lowest brokerage plans can help our users tremendously.

Which Is Riskier: Trading Futures Or Trading Options?

Futures vs options trading always seem to be up for discussion. Traders talk and talk about whether futures or options are riskier. In any case, it's important to think about how much risk you can handle before you take a side in the ongoing debate. Also, once you know exactly what futures and options are, it will be clear which one has more risks than the other. Trading is a risky business, that’s why you should try with new-age technology. We at Zebu, a share trading company offer our customers the best online trading platform to help with their online stock trading journey. A Brief Explanation of Options A contract between a buyer and a seller is an option. It gives the owner the right, but not the obligation, to buy or sell an asset at an agreed-upon price within a certain time frame. Options are contracts that are parts of a larger group of financial instruments called derivatives. They can be used on indices, stocks, and exchange-traded funds (ETFs). On the stock market today, options get their value from the underlying securities, such as stocks. When you trade stocks, all you are doing is trading ownership in a publicly traded company. Options contracts, on the other hand, let you trade the right or obligation to buy or sell any underlying stock. If you own an option, you do not automatically own the thing that the option is based on. Also, it doesn't give you any rights to dividends. Futures: A Short Explanation Futures are also contracts or agreements to buy or sell certain stocks or commodities at a certain time in the future. In a futures contract, the buyer and seller agree ahead of time on prices, quantities, and the dates of future deliveries. You can either buy or sell in a futures contract. If the price goes up, buyers make money because they bought the asset when it was cheaper. If the prices go down, the people who sold at higher prices will make money. A Quick Look at Futures, Options, and Risks If you do online trading, you may know some things about how the markets work. For example, if you trade and invest in stocks, you know that you need to open a demat account. In the same way, you would know that futures and options are derivatives if you knew anything about them. They also use leverage, which makes them riskier than trading stocks. Futures and options both get their value from the asset that they are based on. Futures and options contracts make money or lose money based on how the price of the asset they are based on changes. There is enough risk in the share market today. Your risk tolerance may be a factor in deciding between futures and options, but it's a given that futures are riskier than options. Even small changes in the price of an underlying asset can affect trading. This is especially true when trading options. Even though both have the same amount of leverage and capital at risk, futures are riskier because they are more likely to change. You need to know that leverage is like a "two-edged sword." You can make money quickly and lose it just as fast. In terms of futures, you can make money quickly or lose it in an instant. This is not the case with options trading. With options, you can buy either "put" or "call" options while you are trading online. The most you can lose is the amount of money you have put into the options. If your prediction is way off and your options are worthless by the time your contract is up, you may have some bad luck, but you will only lose the premium you pay for the options. With futures contracts, on the other hand, you have unlimited liability. You will have to make a margin call to add more money to your account to make up for the daily losses. If you lose money every day, you may have to keep going until the underlying asset stops going against the wind. If you put most of your money into futures contracts and don't have enough money to cover your margin calls, you could even go into debt. Does all of this sound too risky? You don't have to worry. Technically, futures are not inherently riskier. Instead, it is the fact that futures can use a higher level of leverage that makes both profits and risks bigger. You can easily borrow money to buy stocks and get 5:1 leverage. With futures, you could get 25:1, 50:1, or even more. So, even the smallest moves can lead to huge profits or huge losses, depending on what was invested. Things to think about If traders had to choose between trading futures and trading options in the world of online trading, options would be the more interesting choice. In options, the most you can lose is what you put in the first place. Options trading might be the better choice, especially if you use the spread strategies that options give you. If you plan to hold on to trades for a long time, bull call spreads and bear put spreads can increase your chances of success. Futures are riskier because they use a higher level of leverage and a smaller amount of cash to control assets with a higher value. This means that the amount you can lose may be higher than the amount you put in at first. Also, some things about the market could make it hard or even impossible to sell or hedge a certain position. Try our new-age technology now! We at Zubu, a share trading company offer our customers the best online trading platform to help with their online stock trading journey.

Things You Should Know About The Currency Market In India

Indians know a lot about the equity and stock markets in their country. But the currency market in India is confusing to a lot of people. Understanding the basics of the Indian currency markets is important if you want to make money trading forex online. Before you do any kind of investing, you should learn how it works. In the same way that you should be careful when you first start trading on the currency markets, you should also be patient when you are learning how to trade on the stock market. You might feel nervous at first since the concept of trading with currency can be new to you. But there are some basic things you should know about the markets and how they work that can help you start investing. You might learn more from real-life situations than from any book. Because trading currencies isn't as common in India as it is in other parts of the world, there are five things you should know. 1. Is currency trading legal in India? In India, online forex trading has not become as popular as other types of investments. The main reason investors don't trade currencies is because the Reserve Bank of India puts limits on currency trading. They find that traditional equity trading, which starts when you open a demat account, is easy to understand and easy to do. But trading currencies in India is not as hard as it might seem at first. The Indian Rupee must be used as the base currency in all trades for the Reserve Bank of India to let people trade on the Forex market. The Reserve Bank of India has added GBP-USD, EUR-USD, and USD-JPY to the list of assets that can be traded. These are all cross-currency pairings. 2. Know what the different Indian currency markets are. If you want to trade currencies in India, you might not need to open a demat account. Still, you'll need a Forex trading account, which could be linked to a bank account. After you've done this, you can trade on two main types of currency markets. They include both spot markets and futures markets. Due to the limits on currency trading in India and the low profits that derivatives used in currency trading offer, investors choose to put their money on the futures market. 3. What factors affect the Indian Foreign Exchange Markets? Forex trading online is not for the cautious trader. You need to be aware of the risks because changes in currency and the economy could affect other countries. Currency prices change because of a number of geopolitical factors and events. Central banks, on the other hand, often have an effect on the Forex markets. Central banks use a variety of tools to do this, such as those that affect monetary policies, those that change the rules of the exchange regime, and those that affect currency markets. The Reserve Bank of India, which is the country's central bank, is very important to the way currency markets work. It does this whenever it needs to, keeping the Indian Rupee from losing value in the process. 4. Sign up to trade currency in India SEBI, which stands for the Securities and Exchange Board of India, is in charge of keeping an eye on the middlemen who work in the Indian foreign exchange market. If you want to trade currencies, you have to sign up with a broker that SEBI has given permission to be regulated. Brokers who are allowed to trade in currencies by SEBI must have a current licence from SEBI. 5. Trading on the Indian Foreign Exchange Market Once you have signed up with a SEBI-approved Forex broker and put money into your account, you can start trading on the currency market using the Forex online trading platforms that your broker offers. You can be successful in trading by using a number of different strategies. But if you want to trade something, it's best to start with small trades, especially in places like India, where the currency market is still growing. If you would like to get started with currency trading, open an account with Zebu today and get started now.

Top Forex Trading Mistakes To Avoid

India has recently become a popular destination to trade currencies online. More and more people want to profit from changes in currency prices, so they are getting into the currency market. If you want to start doing intraday trading in forex, this post is for you. Here are some of the most common mistakes that both beginners and experts make, along with suggestions for how to avoid them. 1. Relying on leverage a lot There are two things to know about trading with leverage. You may be able to open a big position with a small amount of the transaction's value. If the deal goes well, using a lot of leverage can help you win a lot more. But if the deal doesn't go as planned, you could also lose a lot of money. To avoid making this mistake, you should always be careful about how much leverage you use. You should only use leverage if you can afford to lose it. In this way, you can protect yourself from large losses a lot. 2. Ignoring technical indicators of trading The daily price changes on the currency market are affected by technical factors. Online forex trading is a sure way to lose money if you don't know about or pay attention to technical trading indicators. To avoid this mistake, base your trades on technical indicators like MACD and candlestick patterns. This will help you predict how prices will move and make the right changes to your holdings. 3. Trading for revenge Losses are a part of investing online that can't be avoided. This is true even when it comes to the currency market. But when they lose money, a lot of traders give into revenge trading. Revenge trading is the act of trying to make up for losses by increasing trading capital. But this is not a good idea. If you give in to your feelings when trading, you will make bad decisions. To avoid this, you should always take a few days off after a loss to heal. In the meantime, think about and reevaluate your losing trade to figure out where you went wrong. Because of this activity, you will get better at trading. 4. Taking positions before the news comes out This is a mistake that a lot of traders, especially new ones, tend to make. They make trades right before important news comes out so they can make money off of the volatility. Most of the time, though, that kind of move doesn't work. During times of high volatility, when you trade forex online, the price changes may come as a surprise. Even if the news is good, the changes in the price of the currency pair might not be right. The best way to avoid making this mistake is to avoid trading before any news comes out. Wait until the news event is over and the market has calmed down before making any trades. Conclusion Before you start a forex transaction, you should always make a plan and stick to it. Put in place the right stop losses as well to lower risks. So, if you want to learn more about FX online trading, you should contact Zebu right away. For forex trading, you need a demat account and a trading account. Both of these can be opened online in just a few minutes.