A place where financial instruments are traded, wherein the delivery of stock takes place is known as cash market. While the Future market is a place where only future contracts are bought and sold at an agreed date in the future and at a predefined price.
In case of cash market when you buy shares and take delivery. You are assumed as the shareholder of the company until the time you hold the shares. Whereas in the future market you can never be a shareholder when you trade in Futures.
The delivery of stocks is done on T+2 days in the cash market. Whereas in the future market no delivery takes place as the Future contract expires on the expiration date.
The full amount needs to be paid at the time of buying shares in the cash market. However, in the future market, only margin money requires being paid for initiating the Future contract.
In case of cash markets, one can buy an even single share of the company but in the future market. One has to buy a minimum lot size which is already defined. For example in case of NIFTY lot size is 75.
You can buy shares and hold for life in cash market but in futures. You have to settle the contract on the expiration date i.e. a maximum of three months.
Suppose you’re an investor of the corporation then you may be entitled to receive the dividend. However, in an exceedingly future contract, you’re not entitled to any dividend.
It is believed that the traders buy shares for investment purpose in cash market. But the futures can be traded for hedging, Arbitrage, or speculation purpose.
If you want to begin trading in cash and future market then you can get in touch with the technical analysts. Money Classic Research, who are expert in delivering accurate stock future tips to their clients.