As far as I know futures are similar to delivery based trading but they have expiry on which it has to be squared off and they also provide margin. So if I am sure a certain stock will rise up but I am not sure when so isn’t it better to buy the third month expiry instead of current or next month? Since I can square off any time isn’t having the third month as expiry a little comfortable than the current or the next month?
bro, it depends which expiry you think your target will be achieved
better to trade near month, you can roll-over it to next month, whenever you want,
you can buy next month future selling your current month contract, nearly same price, at expiry or before that
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Yes but let’s say my target is achievable in the current month but just to be safe isn’t it good to buy the third month contract?
bro, the near month shows more movement with the price, and order book is large there so you can enter or exit easily and at your price
Ohh okay so it provides great volatility.
correct, you can check you’ll see mostly dashes in far month future contract in shorter time frame,
one should choose where entry and exit are comfortable
One more question. If I want to continue the future contract for the next month what is the extra cost and process for the same?
it’s just selling this month and buying next month no processsing, just your order execution is the process.
and the cost is the differrence between the prices of selling and buying
if you sell @10100 this month and buy next month @10150, so the difference is 50 points that’s considered to be cost
if you sell @10100 and buy next month @10050 your cost is -50 means more 50 points profit earned