Futures and Options (FNO) can seem intimidating if you’re new to the stock market. However, with some knowledge and research, trading in FNO can be a lucrative way to invest and trade in the stock market. Here’s a beginner’s guide to FNO:
What are Futures and Options (FNO) Stocks?
Financial instruments known as derivatives draw their worth from a base asset, in this instance, stocks. We refer to equities accessible for trading as FNO stocks. A trader can trade FNO stocks on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Types of Derivative Contracts in FNO
There are two types of derivatives contracts in FNO – futures and options.
In futures contracts, the buyer commits to purchasing a specific amount of the base commodity at a specified price and future date. In options contracts, the buyer can purchase or sell the underlying commodity at a preset price and at a predetermined future time, but not the responsibility to do so.
How to Start Trading in FNO Stocks?
To start trading in Futures and Options (FNO) stocks, you need to open a trading account with a broker that provides FNO trading facilities. The broker will provide you with a trading platform where you can buy and sell FNO stocks. Once you have opened a trading account, you can start trading in FNO stocks by placing orders through the platform.
It’s critical to comprehend the fundamentals of the stock market and the dangers of buying FNO equities before you begin. Additionally, you need to be well-versed in the various dealing techniques applied to FNO investing.
How to Choose FNO Stocks to Trade?
Conducting a thorough study and picking Futures and Options (FNO) stocks that will likely perform favourably in the future is crucial. When selecting FNO securities, you should take into account the following:
Financial Performance: Before purchasing FNO stocks from a business, you should consider its financial success. Select businesses with a solid track record of financial success.
Industry Trends: Before purchasing FNO securities, you should consider industry patterns. Search for sectors that are anticipated to perform well going forward.
Market Trends: It is important to monitor the trends and news that can impact the stock market. This can help you make informed decisions while investing in FNO stocks.
How to Place Orders in FNO Trading?
To place orders in FNO trading, you need to use the trading platform provided by your broker. Here are the different types of orders that you can place in FNO trading:
Market Order: A market order is to buy or sell FNO stocks at the prevailing market price.
Limit Order: A limit order buys or sells FNO stocks at a specific price or better. This type of order is executed only if the market price reaches the specified price.
Stop Loss Order: A stop loss order is an order to sell FNO stocks at a specified price or worse. This type of order limits losses if the market moves against your position.
Tips for Successful FNO Trading
Here are some pointers to help you succeed when buying Futures and Options (FNO):
Do Your Research: It’s crucial to conduct a study and comprehend the dangers associated with buying FNO stocks before deciding.
Start Small: It’s a good idea to start small when you’re new to FNO investing and increase your stake steadily as you acquire more experience.
Use Stop Loss Orders: Always use stop-loss orders to limit your losses in case the market moves against your position.
How To Use FNO Feature on Stolo?
Stolo is a powerful tool that allows users to analyse FNO stocks and their option chains, Open Interest (OI), and more. Here are some steps that users can take to use Stolo for all 191 FNO stock analysis:
- Sign up for Stolo: To use Stolo, you need to create an account. You can sign up for a free or premium account, depending on your requirements.
- Navigate: After signing up for Stolo, go to the FNO market analysis page. Here is a summary of all the FNO stocks that can be analysed with Stolo.
- Choose the FNO: From the list of FNO stocks, choose the stock you want to analyse. Stolo provides detailed information on each stock, including the stock’s option chain, OI, and more.
- Analyze the option chain: After you’ve decided which FNO company to investigate, go to the option chain menu. This section details the stock’s option chain, including the target price, premium, OI, and more.
- Analyze the OI and buildup: Stolo also provides a detailed analysis of the stock’s OI and buildup. You can use this information to make informed decisions about your trading strategy.
- Use screeners: You can use the screeners to find stocks that meet your specific trading requirements. You can use TreadingView which is the best free stock screener out there.
Learn more about FNOs before you venture into Futures and Options (FNO) Trading. Click here to Explore the pros and cons of FNO