What is the right age to start trading in Stock Market derivatives, futures, options, commodities.?


#1

Is there any right age to start trading in the stock market such as futures, options and commodities.


#2

There is nothing as right age to start trading in stocks. Off-course the age required to open an account in a bank and brokerage account is one of the main consideration. This can be also managed by using family member or relatives account. Hence age is not a problem to trade in the stock market.


#3

There is no right to start trading in derivatives in the stock market as long as you have demat account.

If you’re in the financial market for quite some time or involved in trading and investment, you might have heard about derivative.

Derivative is a vast topic which is often used to speculative and hedge investments. If you know about fund managers, you might know that they often use derivative products like options in order to hedge their investment position. Derivative comprises of various investment products like forwards, futures, options and swaps. However, today we’ll discuss in detail about options.

James Chanos said-

Derivatives in and out of themselves are not evil. There’s nothing evil about how they’ve accounted for, and how they’re financed, like any other financial instrument if done properly

Lets understand what is Options Trading:-

An option is a financial contract which gives the buyer the right but not an obligation to buy or sell the underlying asset at an agreed upon price on or before a specified date. In short, it is used as a hedging instrument.

Let’s understand this with the help of an example. Since predicting weather conditions is really a difficult task, hence the farmers had to hedge their position to bad weather. So farmers purchase the derivative contract in case the crop gets damaged due to bad weather. However if the weather is good, he just looses the cost of purchasing the contract. In short, it’s very similar to buying an insurance policy.

Futures are financial contracts where buyer and seller are both obligated to buy or sell financial instrument at a predetermined date and price.


#4

Thanks for the detailed reply. If understanding in derivatives can overcome the age factor then what is the right amount to start with derivative trading. Is there any course which details how to Learn derivative trading?


#5

Thank You for your valuable feedback. The amount of money required for derivative trading totally depends upon your risk appetite and financial condition.

Yes, you can join the NSE Academy Certified Option Strategies for a detailed study on Derivatives.