How do I select a futures contract. What are all the parameters that I should consider before choosing one?

Everybody says that F%26amp;O market is risky and one should try to avoid investing in it until they have thorough knowledge. But how would I gain experience if I am not investing in the first place itself. My question is how do I select a good futures contract? What all should I look for in a companybefore choosing one? I know the answer might be very generic but a few starting points would be useful.|||Step 1) Read as much as you can about technical analysis, and learn which indicators work and which don't work.


Step 2) Learn about risk management and money management.


Step 3) Develop a disciplined trading plan that includes objectively set entry, exit, and stop points.


Step 4) Study the price charts for all of the markets that you want to monitor. Apply technical analysis to the charts to find the best risk/reward trading opportunities.|||On Future %26amp; Options.


You are betting on the movement of price in short term. Well this is not different than what you do for equity also. In equity if you buy at a price you can hold for longer time without booking loss but in future %26amp; option time is important. U have to either excercise or book profit/loss on or before expiry date.





Secondly, In Future you generally play on margin money which is small percentage of total money involved. But you get profit/loss of the actual quantity.





For ex. you buy one lot Nifty future at Rs. 5000 . Total value of the deal is Rs 2.5L. But you can go ahead in buying this lot at about Rs 25K (Approx figure)only . So if the market moves up by 500 points then your return is 25K which is double your return. or if market goes down by 500 points then you loose 25k which is total capital loss.





Therefore, it can get risky. On Option the volatility is much higher, on a good day you can earn double in one day but loss is limited but as time passes its value goes down and on contract day its effectively zero. So if your prediction is incorrect then you loose your option money.





F%26amp;O is very addictive. Once you start making money you do more and more on less researched scrip and if you play without stop loss then your entire capital may get wiped out.





So for somebody as enthusuatic like you, I would suggest you to look for Major index like S%26amp;P Nifty or look forr stocks that are less volatile and gradually move into more riskier ones. Avoid playing short till you get proficiency|||theoretical prices of futures are decided by the difference between the current value of the future + the interestrates minus the costs devided by the market interestrates on the same amount.





do realise that on a 150 dollar contract its easy to loose 5000 a day or even 50.000 on an eventful market day (like a crash)