What's the confusion in between Derivatives and Equity Market?

Derivative market is growing very fast due to its increased fluctuations of underlying assets prices in financial market. Forwards one of the product in derivatives is most dealt in market where a contract of buy/sell of underlying asset at certain future date is decided at the time of contract irrespective of price of the underlying asset at the time of delivery and if the contracted is made under regulated exchange.Options gives the right of the asset to the buyer of contract but it do not give obligation of buying or selling on or before stated date and at a stated price.

Basically, people have to decide how do they want to enter the derivative market as an hedger,speculators/trader or arbitrageurs. Mostly the corporations,investing institutions use derivatives to hedge their exposure to market variables. Traders speculate the future values of contract and buy/sell according to their predictions. Arbitrageurs buy or sell asset at lower price at certain location and finds another location to sell or buy at higher price.

There are various risks involved in derivative trading and people must understand the risks like defaulter counterpart, loss on price due to it's movement,, frauds like inadequate documentation, improper execution. Hence a model risk disclosure document is issued by the members of exchange.There is also importance of index which tells us about the average movement of share price in the market.People who are very interested in stock prices, can also deal index which provides them the option of buy and sell. We have two index in India, Sensex & Nifty where people trade with their money.It is interesting to know "How much actually amount one can earn through trading in MCX or NCDEX exchange" as commodity market is a best plateform to make money easy and quick. Most of the investor has many misbelieve related to the commodity market.

Derivatives market is again very liquid market which means in this market large number of orders are places without changing the price and a well diversified market reflects the overall economy also reduces the chances of risk involved. People investing in derivative market believes in technical analysis before investing in the market.

Let's Understand how does this help!

Technical analysis is the forecasting of future prices of the shares depending upon the past prices of the same shares and it's movements. It also depend upon the current demand and supply of the shares. Putting these past trends in a chart and applying various patterns to analyse the future movements. Although the researchers predicts and analyse the market but it's movement is completely random because this market is probabilistic market where trends do follow but sometimes they don't. Hence, Nifty call receivers are mostly the leading investors and rarely find any false lead which help them to re-invest the profits and take out their principal price out of risky market.