There are many ways to trade with minimum risks in the stock
market. Some traders use the fundamental analysis and long term trading as the
way to trade effectively in the stock market. A long term investment with a
diversified portfolio is one of the ways to trade with minimum risks. Other
ways include the arbitrage techniques as well as spread techniques of trading.
In this article we will discuss in detail about the arbitrage technique.
The arbitrage technique can be practiced in two ways. One is
to trade inter exchange arbitrage. In this case the same stock is bought and
sold in two different exchanges. Thus a limited profit is incurred based on the
price difference between the stocks in two different exchanges. This profit is
maintained even when the prices of the stock at the two exchanges changes.
The other technique is cash futures arbitrage. In this
technique the same stock is bought and sold in the cash and futures market. The
stock is usually bought in the cash market and sold in the futures market. Thus
the trader will incur a profit based on the difference between the prices of
stock in the cash and the futures market. At the expiry of the futures contract
the trader can initiate the buy and sell calls again and can make the profit. The
only negative aspect about this type of trading is the investment of the trader
gets blocked in this type of trading and the returns are not usually very high
in case of the arbitrage trading.
Another risk free way is to trade on the basis of the advice
from the advisory firms. These advisory firms provide accurate stock market
tips to their clients. Money classic research is one such reputed advisory
firm.
No comments:
Post a Comment