Disadvantages of Future Trading over Stock Trading in share market
July 23rd, 2008
1) Limitation on holding -
If you buy or sell a future contract then you have limitation of time frame to square off your position before expiry
date.
For example - If you buy or sell future contract of one month expiry period then you have to square off your position
before your expiry date of that month, so in this example you got one month period. So likewise if you go for two
month expiry period then you get 2 months and if you go for three month expiry then you will get 3 month expiry
period to square off your position.
2) Level of Risk -
Due to margin facility in future trading you may earn huge profit by investing fewer amounts but at the contrary side
if your trade goes wrong then you may have to suffer huge loss.
3) Limitation on stocks -
You can’t do future trading on all stocks. You can only do on listed stocks on Nifty and Jr. Nifty.
Entry Filed under: F and O
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