Straddle and Strangle

Often novice traders consider trading in derivatives a risky preposition, well that’s not completely true and in our all new derivatives series we will take you through the world of exciting futures and options strategies to help you better understand that how with the help of futures and options we can look for better rewards while taking calculated risks. We will take two popular strategies based on their individual merit and market conditions, at the same time draw a comparison between them. Let’s start first with derivatives strategies that are meant to benefit from volatile markets.

Most commonly used options strategy that comes handy in Volatile conditions are commonly known as “long Straddle” and “Long Strangle”. Continue reading

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Decoding a Technical Chart

As they say, A picture says a thousand words, this perfectly stands true in the terms of technical analysis, where the whole trading statistics is plotted on a pictorial representation.

A technical chart is the graphical representation of open, high, low and close of a stock on a X and Y axis based stock chart.

X Axis represents the DURATION in minutes/ Days/ weeks/ months etc

Y Axis represents the PRICE of the underlying

Decoding Charts

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Chopping off the Dragon’s Tale!

Chopping off the Dragon’s Tale!

On a recent publication by the economists of Goldman Sachs and the International Monetary Fund has forecasted that the Indian economy would grow faster than that of China within a time span of one or two years. However, the day came sooner than what was expected. As per the exhibits released in mid-February, it shows that the GDP of India rose by 7.5% YoY during Q4 of 2014, which is a bit faster than that of China. It is always a disputed discussion, when it comes to the strength of the Chinese economy. Now, it’s the turn for India to have their numbers being questioned!

GDP

The data were speculated in the end of January, when the Indian Central Statistics Office made public of their revised estimates of Gross Domestic Product values as a part of the rebasing exercise. The GDP is usually measured by referring to the price and structure of the economy in a base year. Over a period of time, this snippet becomes irrelevant and the GDP figures become less and less accurate, hence, the base year is updated every few year. The CSO changed India’s base year from 2004-05 to 2011-12, result of which was the revision of GDP growth from 4.65% to 6.85%. Continue reading

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Order Types & their Relevance

Order Types & their RelevanceOrder Types

As a trader either individually or through a stock broker you will have to execute your position at any point of time. The term order actually refers to the instruction that the trader gives to the brokers for either buying or selling the stocks on the exchange. However there are several types of orders and as a trader you must be well versed with their implications for careful trading and analysis.

Market Order

This is the simplest of all and easy to understand as well. All you need to do is contact your broker and place a buy or sell order for a particular share at a particular price and number. Nowadays such orders can also be placed through your online trading platform wherein you will get the option for trading at the comfort of your home. With a few clicks of the mouse you can easily place the order successfully. The price at which the order is placed will be the current market price and therefore there is no control on it if the market is highly volatile. In certain extreme cases the market order that is placed at a certain rate and the final amount received or paid may show a great difference.  Continue reading

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Trading Types

Trading has always been a fascination for all those who have got nerves of steel and volatility is their love. Careless wallets get emptied sooner than later whereas adequate preparations help master the trend, be it short term, intermediate term or long term. Like of the types of trends, the trading can be distinguished in various types. We are going to discuss some types of trading in the article and depending upon individual’s psychology, one can start trading accordingly. Market keeps on generating small yet frequent inefficiencies which a trader can capture to earn his/her share of flesh.

Depending upon the time frame in which a trader prefers to trade and other crucial parameters, trading can be divided into various types:

Momentum Trading: Momentum trading is a way to ride a short term trend wherein the trend is slightly of longer time frame than swing trading and is usually followed by high volume. Momentum investors aim to capture the waves of enthusiasm that can send stocks blasting higher for extended periods of time. Traders following this approach generally stick to few number of stocks and have primary motive of cutting losses short. While these traders use margin money to improve their profits but sticking to discipline in this type of trading is crucial as the momentum may soon calm down and profits are supposed to be booked prior to the settling down of waves. The key to momentum trading is “act quick and act smart”. Continue reading

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Real Estate Investment Trusts (REITs) – Is there a future ?

In the developed world, REITs came into existence several decades ago and gained huge popularity over the years. Why is it that India, a rather late entrant into this arena, has been simply unable to kick-start the REITs?

REITs – Origin & Structure

The first draft of guidelines for REITs was released by SEBI in 2008 but in the wake of global financial crisis and a lack of clarity on taxes, it failed to get consent. It was only in August 2014 that SEBI finally gave its nod of approval by allowing Indian firms to launch REITs. A REIT is an investment trust which invests in income-generating real estate assets like commercial, residential properties with the objective of creating return for its unit holders. It represents a great opportunity for retail investors to participate in the real estate sector without having to buy a commercial property. For the developers, REITs will facilitate easier access to funds and lower their cost of capital.  Continue reading

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A Beginner’s Guide to REITs

If you are finance professional or an avid follower of the financial markets, you are likely to have come across the term REITs. But majority of us continue to be oblivious of this fascinating yet budding financial instrument.

First, let’s enlighten you with the basics. A Real Estate Investment Trust (REIT) is a company that owns and in majority cases, operates income-producing real estate or related assets. The assets owned or managed by REITs can be wide-ranging from apartments, offices, shopping centers, industrial & infrastructure facilities, hospitals, warehouses to mortgages and loans. It essentially borrows from the idea of a mutual fund wherein anyone can buy & sell security units and thus invest in a portfolio of diversified real-estate properties. Therefore, this scheme allows investors to earn a share of income generated from real estate assets without actually making any purchase in real estate property. Continue reading

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