Trading

Understanding Gold (XAUUSD) Trading – A Beginner’s Guide

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Gold has been valued by humans for thousands of years. In ancient times, people used it to make jewelry, coins, and symbols of power. Even today, gold is seen as a safe and trusted form of wealth. To many people, gold is not just a metal. It represents security, trust, and financial stability.

But how is the price of gold actually decided? Who decides it? And why does gold continue to hold value even in modern times? Let’s understand this step by step.

Why Gold Has Value?

Gold is valuable because it is rare, durable, and universally accepted. Unlike paper money, gold cannot be printed. Unlike other metals, it does not rust or lose shine. This makes it an excellent store of value.

In addition, gold has cultural and emotional value. People buy it during festivals, weddings, and as gifts. Central banks also keep gold as part of their reserves because it builds trust in the stability of their currency.

So, gold has both practical value (it is limited and lasting) and emotional value (people trust it across cultures and generations).

History of Gold Pricing

The practice of setting a standard gold price started more than 100 years ago. In 1919, a group of five banks in London began meeting daily to agree on a single price for gold. This process was called the London Gold Fixing. At that time, it gave the world one trusted reference price for trading gold.

Over time, the system changed. Instead of a small group of banks, today the London Bullion Market Association (LBMA) manages the official global gold benchmark. The LBMA Gold Price is published twice a day in U.S. dollars, euros, and British pounds. It is widely used by banks, jewelers, investors, and central banks as the reference point for gold pricing.

This history shows how gold pricing moved from private meetings to a transparent and regulated process that the whole world can trust.

Key Institutions and How They Fit Together

The gold market is made up of several important players who together decide how gold is traded and priced:

1. The OTC Market (Over-the-Counter)

Most gold trading happens in the OTC market, which is a global network of banks, dealers, and institutions. There is no single physical marketplace. Instead, large buyers and sellers trade directly with each other.

2. The London Bullion Market Association (LBMA)

LBMA is a key institution that sets the reference price for gold twice a day (known as the LBMA Gold Price). This price is used worldwide as a benchmark.

3. Central Banks

Central banks across the world hold large amounts of gold in their reserves. They buy and sell gold to manage economic stability and to build trust in their currency.

4. Gold Mining Companies

These companies supply freshly mined gold to the market. They play a big role in how much new gold enters circulation every year.

Together, these institutions keep the gold market running and influence how its price is set.

The Primary Source of Gold Price

The primary source of gold pricing is the OTC market, where banks and institutions trade gold directly. Since these are large transactions, the price discovered in OTC trading reflects real market demand and supply.

However, the world needs a standard reference price. That is why the LBMA Gold Price is important. It is published twice daily and acts as a trusted benchmark used by traders, jewelers, and investors around the globe.

The spot price of gold reflects the current rate at which gold is being traded in the market. Reliable sources include:

  • The LBMA website
  • The World Gold Council website
  • Trusted financial platforms like Bloomberg, or Reuters

Factors That Influence the Price of Gold

The price of gold is not fixed. It changes every day depending on global events and economic conditions. Some of the main factors are:

  • Inflation: When the cost of goods rises, people turn to gold as protection for their wealth. This increases demand and pushes the price higher.
  • Interest Rates: When interest rates are low, people prefer to invest in gold instead of bonds or savings accounts, which makes gold more expensive.
  • Geopolitical Events: Wars, conflicts, or global crises make investors nervous. In such times, gold is seen as a safe place to put money, so demand rises.
  • Supply and Demand: If mining output falls or central banks buy more gold, the supply becomes tighter and the price goes up.

Global Gold Supply and Reserves

Gold is limited, and new supply comes mainly from mining. On average, about 3,000–3,500 tonnes of gold are mined every year worldwide.

Apart from newly mined gold, a huge amount is already held in reserves by central banks. According to the World Gold Council, central banks together hold more than 36,000 tonnes of gold.

Countries like the United States, Germany, Italy, and India have some of the largest reserves. These reserves act like financial insurance for nations, protecting them during uncertain times.

With limited annual supply and huge reserves held by central banks, gold will always remain important in the global financial system.

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

What Are Trading Sessions? – Understand Their Relevance

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Trading Sessions Explained

In the world of financial markets, a trading session refers to a specific period of time when markets in a particular geographic region are most active.

Since forex operates on a 24-hour cycle, the sessions follow the sun around the globe – markets open in Asia, then Europe, and finally North America before the cycle begins again.

Also Read – I Created the Best Bitcoin Guide You’ll Ever Read

The Four Main Global Trading Sessions

There are four major sessions that divide the trading day:

The Sydney Session

The Sydney session takes place in Australia.

It opens the market after the weekend and marks the beginning of the weekly trading cycle. Since it is the first session of the week, activity is usually quieter compared to the other major sessions.

The Tokyo Session

The Tokyo session happens in Japan and also includes other large Asian markets.

This session is especially important for Asian currencies, with the Japanese yen (JPY) being the most active. Traders often watch this time to see how Asian markets set the tone for the day.

The London Session

The London session is based in the United Kingdom and is the busiest of all four sessions.

It sees the largest trading volume and the highest liquidity, making it the center of global forex activity. Because of this, a lot of price movements and trading opportunities occur during these hours.

The New York Session

The New York session runs in the United States and is the second busiest trading session after London.

It is known for strong volatility, especially during the time when it overlaps with the London session. Many important U.S. economic announcements are also released during this period, which can cause major market moves.

Also Read – What is the difference between ICT and SMC?

The Most Important Sessions to Watch

While each session brings opportunities, the overlap periods are where the most action happens.

During overlaps, more traders are active, which increases liquidity, reduces spreads, and fuels stronger movements in price.

London and New York Overlap

This is the prime time for traders everywhere.

With both European and North American markets open, trading volume reaches its peak. Combine this with frequent economic data releases from both regions, and you get fast-moving, highly liquid conditions. If you can only trade a few hours a day, this overlap is often the best choice.

Tokyo and London Overlap

This overlap isn’t as intense as London/New York but is still meaningful.

It bridges the Asian and European sessions, often leading to fresh volatility as traders shift focus from yen-related pairs to European currencies like the GBP and EUR. Pairs such as GBP/JPY or EUR/JPY can be particularly active at this time.

As a new trader, you don’t need to stay awake 24/7 monitoring the markets. Instead, focus your attention on the times of highest liquidity and volatility, particularly the overlap periods.

By concentrating on these sessions, you not only conserve time and energy but also increase your chances of finding profitable opportunities in the market.

Remember, trading is not about being present all the time – it’s about being present at the right time.

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

Margin and Leverage Explained for Beginners

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With margin and leverage, you put up a small amount of your own money (the margin) to control a much larger trade position (the full traded value) by borrowing the rest from your broker (the leverage)

Margin is the portion of a trade’s value you put in as collateral, while Leverage is the facility your broker provides that allows you to control the full value of the trade without putting up the entire amount yourself.

What is Margin in Trading?

Margin is the amount you deposit with a broker or exchange to open a trade. You can think of it as a security deposit. Instead of paying the full value of the trade upfront, you only put in a small percentage of the total value of the trading instrument, and your broker allows you to control the rest.

For example, suppose Bitcoin is trading at $100,000. Your broker might only require you to deposit $5,000 to open a position. This $5,000 is your margin, which you are depositing with your broker.

The word “margin” comes from the Latin word margō, meaning “edge” or “border.” Over time, this evolved to mean “an extra amount” or “a surplus” that is kept in reserve. The term “margin” was applied to trading because it perfectly describes the function of the deposit: it is the cushion or borderline that a trader must maintain to keep a position open. If the value of the trade drops and “eats into” this margin, the broker issues a “margin call,” demanding that you restore the cushion to the required level.

What is Leverage in Trading?

Leverage is the facility your broker offers that lets you control the full value of a trade without having to provide the entire capital yourself.

Using the earlier example, you deposited $5,000 to open a trade for one Bitcoin worth $100,000. Your broker provided the remaining $95,000 to facilitate the trade.

In this scenario:

  • You provided 5% of the total value ($5,000).
  • Your broker provided the remaining 95% ($95,000).

Because your broker helped you control a position 20 times the size of your initial margin ($100,000 ÷ $5,000 = 20), you are said to be using 20x leverage provided by your broker.

Similarly, if a broker asked you to deposit $10,000 for a $100,000 Bitcoin trade, the broker would cover the remaining $90,000. In this case, you would be using 10x leverage ($100,000 / $10,000 = 10).

Leverage is the multiple of your deposited Margin that shows the Total Value of your trading position.

The calculation uses the full value of the asset, not just the amount of money a broker lends you.

Margin and leverage are directly linked:

Margin × Leverage = Total Trade Value

Leverage is the ability to control a much larger trading position than your initial capital would normally allow, using borrowed money from your broker. It is usually expressed as a ratio, such as 10:1 (or 10x) or 100:1 (or 100x).

Bitcoin Example – Price $100,000 with 100x Leverage

Imagine Bitcoin is trading at $100,000 and you want to trade one full Bitcoin. If your broker’s margin requirement is 1%, you can calculate the margin needed.

That would be $100,000 ÷ 100 = $1,000.

This means with just $1,000 of your own money, you can control a $100,000 Bitcoin position using 100x leverage ($1000 × 100 = 100,000).

If the price of Bitcoin rises by 1% ($1,000), your profit will also be $1,000, which is a 100% gain on your margin. But if the price falls by 1%, you lose $1,000 and your margin is completely wiped out.

This is why high leverage is extremely risky – even a small move against you can lead to liquidation.

Reference Table

Margin RequirementLeverageMargin NeededPrice Move for Liquidation
1%100x$1,0001%
2%50x$2,0002%
5%20x$5,0005%
10%10x$10,00010%

Benefits and Risks

Profit and loss are calculated on the total size of your trade, not just your margin. Any profit you make using leveraged money is yours to keep, but if the trade goes against you, the loss comes out of your margin.

Using margin and leverage allows you to trade larger positions with a smaller amount of money, which can lead to significant profits even with small market movements.

However, the same principle works in reverse. Losses are also magnified, and a highly leveraged trade can be wiped out by even a small unfavorable price move.

This is especially true in volatile markets like cryptocurrencies, where prices can swing by several percent in a matter of minutes.

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

How Options Are Priced – A Simple Guide

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Option Pricing: Components, Black–Scholes, Put–Call Parity, and Futures vs Spot

Options are not priced randomly. They follow certain principles and mathematical models that take multiple factors into account. Let’s break down the components and logic behind how options are priced, and also understand some important related concepts.

1. Components Behind Option Pricing

The price of an option depends mainly on:

  • Price of the Underlying Asset – Whether it is a stock, index, or commodity.
  • Intrinsic Value – The part of the option price that comes from how much the option is “in the money.”
  • Time to Expiration – More time means more chances for the option to move in your favour.
  • Volatility – How much the underlying price is expected to move.
  • Interest Rates – Market interest rates also have a small but measurable impact on option pricing.

These components work together in a formula. The most popular formula is the Black–Scholes Model, which takes all these inputs to calculate a fair price for the option.

2. The Basic Option Price Formula

Option Price = Intrinsic Value + Extrinsic Value

  • Extrinsic value includes Time Value + Implied Volatility value.

If an option is at the moment of expiration, the time value becomes zero. At that point, the option price equals only the intrinsic value. This is because the “Theta component” (rate of time decay) has fully eroded.

3. Role of Theta – Time Decay

The Theta of an option measures how fast its price will fall as time passes, assuming all else remains the same.

The Theta of an option measures the rate at which its value declines each day as expiration approaches, assuming all else remains unchanged.

  • For option buyers, Theta is always negative, meaning your option loses value with time.
  • This time decay speeds up as expiry gets closer, which is why short-term options lose value quickly.

4. Volatility’s Direct Impact

Option prices are directly proportional to volatility.

High volatility = higher premiums, because there’s a greater chance for large moves that could put your option in the money.

Low volatility = cheaper premiums, as price swings are expected to be smaller.

5. Put-Call Parity and Arbitrage

For European-style options, there’s a mathematical relationship between the prices of calls, puts, and futures called Put–Call Parity:

Futures Price = Strike Price + Call Price – Put Price

A “synthetic future” is not a separate product you can buy or sell. It’s simply an options combination that behaves exactly like a futures contract:

  • Long Call + Short Put = behaves like Long Futures
  • Short Call + Long Put = behaves like Short Futures

Same strike, same expiry.

If this relationship is not true in the market, arbitragers can make risk-free profits.

Arbitrage is the practice of taking advantage of price differences for the same asset in different markets.

For example:

Case 1: Synthetic is Overpriced

  • Strike Price (K) = $100
  • Call Price (C) = $7
  • Put Price (P) = $4
  • Actual Futures Price = $102

From the formula: Synthetic Futures Price=K+C−P=100+7−4=$103

Here, the synthetic is $1 more expensive than the actual futures.

How to Arbitrage:

  1. Sell the synthetic (using options):
    • Sell the call at $7.
    • Buy the put at $4.
      (This behaves like shorting a futures contract.)
  2. Buy the actual futures at $102.

Why It Works:

  • The futures you bought and the short-futures-like options combo cancel each other’s price risk.
  • The $1 difference is locked in as profit, regardless of market movement.

Case 2: Synthetic is Underpriced

  • Strike Price (K) = $100
  • Call Price (C) = $6
  • Put Price (P) = $5
  • Actual Futures Price = $103

From the formula: Synthetic Price=100+6−5=$101

Here, the synthetic is $2 cheaper than the actual futures.

How to Arbitrage:

  1. Buy the synthetic (using options):
    • Buy the call at $6.
    • Sell the put at $5.
      (This behaves like going long on a futures contract.)
  2. Sell the actual futures at $103.

Why It Works:

  • Again, the long-futures-like options combo and the short actual futures cancel each other’s price movements.
  • The $2 difference is your locked-in profit.

6. Why Sometimes Calls Seem More Expensive Than Puts

It may look like calls are more expensive than puts at the same strike or vice versa.

But in reality, options are usually priced correctly according to put–call parity and the level of the synthetic futures price.

This is true even for weekly options. They are priced based on implied futures rather than directly from the spot price.

So, even if you are trading short-term options, futures pricing plays a role.

7. Why Futures Prices Can Be Higher Than Spot Prices?

Futures prices are often higher than spot prices when there’s still significant time to expiration. This happens because of cost of carry, which includes:

  • Financing cost (interest rate for holding the position until expiry).
  • Any other costs involved in holding the asset.

This difference between spot and futures price is known as contango.

As expiry approaches, futures prices converge with spot prices, and the difference disappears on the expiration day.

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

Hedging Through Electricity Derivatives – Why It Matters and What Happens If You Ignore It

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Hedging Through Electricity Derivatives - Why It Matters

Electricity is a unique commodity: it cannot be stored easily, it flows according to the laws of physics, and its production and delivery are subject to constant balancing and complex grid conditions.

Because of these unique features, prices in the electricity market can be extremely volatile. Even short-term spikes can dramatically impact the cost of power for industrial users, distribution companies, or generators.

Unlike most other commodities, no one truly “owns” electricity after it is injected into the grid. Instead, qualified participants get the right to inject or withdraw electricity, subject to grid codes and balancing rules. This structure makes hedging strategies even more critical to manage unpredictable price movements.

Why Hedge with Electricity Derivatives?

Hedging through electricity derivatives is essentially a risk management strategy. These financial contracts including futures, forwards, options, and swaps – allow participants to lock in power prices for a future period, reducing exposure to short-term market volatility.

Key reasons to hedge include:

  • Price certainty: Protects budgets from sudden spikes in power prices.
  • Cash flow stability: Smoothens power purchase costs or sales revenues over time.
  • Market competition: Supports competitive pricing for customers without risking margin erosion.
  • Planning confidence: Enables long-term operational and investment planning.
electricity derivatives market

For example, an industrial unit expecting to use 10 MW of electricity could buy a futures contract at ₹2500/MWh. If spot prices later rise to ₹5000/MWh, the futures contract saves the buyer from paying that higher rate.

How Hedging Works in Practice?

Here are common hedging tools:

  • Forwards: Bilateral agreements to buy/sell electricity at a specified price in the future. In India, these are often seen as long-term Power Purchase Agreements (PPAs).
  • Futures: Standardized contracts traded on exchanges like MCX or NSE, typically cash-settled. These provide liquidity and price transparency but have fixed specifications.
  • Options: Work like insurance – you pay a premium for the right, but not the obligation, to buy or sell at a fixed price.
  • Swaps: Agreements to exchange floating spot market prices for fixed prices over a given period, giving predictable cash flows.

Practical examples, such as a generator selling futures contracts to lock in their generation price, or an industrial buyer using options to protect against price surges while keeping the potential to benefit from lower spot prices.

Consequences of Not Hedging

India’s electricity derivatives market is set for a major milestone with the confirmed launch of electricity futures.

The consequences of ignoring hedging are real and can be severe. Without risk management:

  • Companies might face sharp spikes in electricity bills during peak seasons or unplanned demand surges.
  • Profit margins could collapse if costs rise but sales prices stay fixed.
  • In case of high price volatility, cash flows can become erratic, making it difficult to meet financial obligations or maintain stable operations.
  • Competitors with hedging strategies may gain an advantage by offering more predictable prices to their customers.

For example, a data center operating under a fixed-price contract might suddenly see power bills increase by 50% in a heat wave. If the data center cannot pass those costs to clients, its margins could be wiped out.

This article is for informational purposes only and should not be considered financial advice. Investing in derivatives, stocks, commodities, or other assets involves risk, including the potential loss of principal. Always do your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, market conditions can change rapidly. Always verify data with primary sources before making decisions.

Electricity Option Chain – NSE – MCX – Electricity F&O

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electricity derivatives market

India’s electricity derivatives market is set for a major milestone with the confirmed launch of electricity futures on the National Stock Exchange (NSE) starting July 11, 2025, as officially announced by NSE along with a dedicated Liquidity Enhancement Scheme (LES) to attract active participation.Meanwhile, the Multi Commodity Exchange (MCX), having already received SEBI approval earlier in June 2025, is preparing to introduce its own electricity futures contracts, though its exact launch dates remain unclear, with market sources hinting at a rollout later in 2025.

What Are Electricity Futures?

Electricity futures are standardized, cash‑settled contracts in which buyers and sellers agree today on the price of a specified quantity of electricity for delivery at a future date, though no physical transfer actually occurs.

In India, settlement references the Indian Energy Exchange’s Day‑Ahead Market (DAM) price, with the difference paid or received in cash at expiry.

Hedging serves as a risk management approach by employing financial instruments like futures, forwards, options, and swaps. These mechanisms enable market participants to secure electricity prices ahead of time, helping to reduce their exposure to price fluctuations and unpredictable market movements.

For example, a distribution company might buy an electricity futures contract at ₹3.50 per kilowatt‑hour in anticipation of peak summer demand, where spot prices could rise to ₹5.00/kWh. When the contract expires, if the DAM price reaches ₹5.00, the distribution company receives the difference, helping offset higher procurement costs.

In USA, NYMEX electricity futures operate similarly, using hub prices like PJM or NYISO to manage financial risk across wholesale electricity markets.

What Are Electricity Options?

Electricity options are financial derivatives that grant the buyer the right, but not the obligation, to enter into an electricity futures contract at a set strike price by a specified expiry date. Options help participants manage extreme price swings while controlling downside exposure.

For instance, a generator concerned about falling power prices could buy a put option at ₹4.00/kWh to guarantee a minimum selling price. If the DAM drops to ₹3.00/kWh, the generator exercises the put, protecting its revenues. If spot prices stay higher, the generator can let the option expire without obligation.

The NYMEX market offers options on electricity futures with multiple strike prices and associated premiums, supporting active hedging in a highly volatile commodity. India’s strong participation in equity options, such as Nifty options on NSE, shows similar potential if electricity options are eventually launched.

What Is Electricity Open Interest?

Open interest measures the total number of outstanding futures or options contracts that remain active and unclosed. It is a critical measure of market depth and liquidity.

For example, if one trader buys 20 futures contracts while another sells 20, open interest is 20. If 10 of these positions are later closed, open interest reduces to 10. High open interest typically signals strong participation and better price discovery.

In the U.S., NYMEX electricity markets consistently show high open interest, building confidence in robust, efficient derivatives trading — a target India will hope to replicate.

Confirmed Developments: Electricity Futures

India has officially confirmed electricity futures trading on NSE to begin on July 11, 2025, supported by a Liquidity Enhancement Scheme to deepen market participation and ensure smooth rollout. These contracts will be financially settled, referencing the IEX DAM or, in future, a unified index if Market-Based Economic Dispatch (MBED) is introduced.

Participants in these contracts include distribution companies seeking to fix future costs, power generators aiming to stabilize revenues, large industrial consumers needing predictable pricing, and retail traders, who make up a significant portion of India’s derivatives activity.

MCX, which secured SEBI approval in June 2025, is also preparing to launch its electricity futures contracts, though no confirmed date has been announced. Industry sources expect MCX’s launch to follow later in 2025. These futures contracts create a solid starting point for deeper risk management tools in India’s growing electricity sector.

Speculative: Electricity Options and Option Chain

While electricity futures are confirmed and about to begin trading, electricity options remain speculative.

Regulatory boundaries between SEBI, which regulates financial derivatives, and the Central Electricity Regulatory Commission (CERC), which oversees physical electricity markets, also need to be clearly defined. In addition, India’s spot electricity trading must further mature with stable price discovery before a robust options market can succeed.

By comparison, the NYMEX electricity options market has thrived thanks to a deeply liquid underlying futures market and decades of reliable hub-based spot pricing. India could follow a similar roadmap if these hurdles are systematically addressed over time.

Hypothetical Scenario: NSE and MCX Electricity Option Chain

If SEBI gives the green light to electricity options in the future, India’s exchanges could adopt a familiar structure based on existing equity derivatives.

Options would likely be European style, cash‑settled at expiry, and sized at 1 MWh per contract, with settlement referencing IEX DAM prices around ₹3.50/kWh.

A hypothetical option chain might offer strike prices ranging from ₹2.50 to ₹4.50, with ₹0.25 increments near the current market price and wider steps at the tails. Premiums would reflect India’s historically high volatility in the power sector. As in the NYMEX market, in‑the‑money options would command higher premiums while out‑of‑the‑money contracts would see lower premiums.

An illustrative option chain could look like this:

Call PremiumCall OICall VolumeStrike Price (₹/kWh)Put PremiumPut OIPut Volume
1.05600802.500.0250060
0.808001002.750.0360070
0.551,2001503.000.05800100
0.351,5002003.250.101,000120
0.202,0003003.500.201,800250
0.101,6001803.750.351,200140
0.051,0001004.000.5590080
0.03700704.250.8060060
0.02500504.501.0540040

Such a structure would help manage both upward spikes from peak demand and downward moves from renewable oversupply, while concentrating liquidity at at‑the‑money strikes for efficiency.

Challenges and Preparation

The path to a functional electricity derivatives market in India faces several challenges. Futures markets will need time to build sufficient liquidity, without which options cannot function reliably. Coordination between SEBI and CERC will be vital to avoid regulatory conflicts. High price volatility in electricity will also require robust margining and risk controls, as applied in NYMEX electricity options.

Official Electricity Option Chain Links

As electricity options are not yet launched in India, official option chain links for NSE and MCX are currently unavailable. Once these options are approved and launched, this article will be updated with official exchange links.

ExchangeLink
NSETo be updated very soon
MCXTo be updated very soon

This article is for informational purposes only and should not be considered financial advice. Investing in stocks, cryptocurrencies, or other assets involves risks, including the potential loss of principal. Always conduct your own research or consult a qualified financial advisor before making investment decisions. The author and publisher are not responsible for any financial losses incurred from actions based on this article. While efforts have been made to ensure accuracy, economic data and market conditions can change rapidly. The author and publisher do not guarantee the completeness or accuracy of the information and are not liable for any errors or omissions. Always verify data with primary sources before making decisions.

Pine Script v6: The Ultimate Migration Guide

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Pine Script v6 tutorial

Why Upgrade to Pine Script v6?

Pine Script version 6 was launched by TradingView on December 10, 2024.

It is the latest version offered by TradingView, packed with many new features, syntax changes, and breaking updates from version 5. This upgrade ensures better performance, accuracy, and more structured scripting. Understanding these changes is crucial for smooth migration from Pine Script v5 to v6.

Major Reasons to Upgrade

Pine Script v6 introduces a more robust and reliable type system, making it easier to catch and fix errors before your code runs.

It also adds new reserved keywords like varip, which are specifically designed for handling values that change only during the real-time bar, offering greater control for live strategy execution.

The update provides better control over real-time data through improvements to the request.security() function, allowing for more accurate multi-timeframe analysis.

You will also benefit from a more consistent syntax and updated functions, which help make scripts cleaner, easier to read, and less prone to bugs.

Finally, Pine Script v6 offers more readable and helpful error messages, enabling quicker debugging and reducing the time it takes to resolve issues.

Pine Script v6 vs v5 – Key Differences

FeaturePine Script v5Pine Script v6
Version Header//@version=5//@version=6
Variable DeclarationFlexible typesStricter, strongly-typed
New Keyword SupportNo varipvarip for real-time bar-only updates
Function SyntaxLooseStructured with typed declarations
security() FunctionLimitedEnhanced context & error control
Array.from & Other MethodsBasic supportNew methods like array.from()

Also Read – 5 Best AI Tools for Pine Script to Supercharge Your TradingView Strategies (2025)

Step-by-Step Pine Script v6 Migration Guide

Step 1: Update Script Version

//@version=6

Step 2: Adjust Syntax Differences

Declare types explicitly:

float myValue = close

Step 3: Migrate security() Calls

myVal = request.security("AAPL", "D", close)

New version provides better timeframe support and debugging clarity.

Step 4: Use varip for Real-Time Values

varip float myHigh = na
myHigh := high > myHigh ? high : myHigh

Step 5: Update Function Declaration Syntax

f_sum(float x, float y) =>
    x + y

Step 6: Arrays Are Smarter Now

arr = array.from(1, 2, 3)
array.push(arr, 4)

Step 7: Debug with Clearer Error Messages

You might see common errors like:

  • “no ticks” → Fix by verifying symbol/liquidity
  • type mismatch → Use strict type declarations

Pine Script v6 Features (Basic + Advanced)

Type System Enhancements

All variables now need to be declared with proper types. This reduces bugs and improves performance.

varip Keyword

Tracks values only on the real-time bar, ideal for live strategies.

Updated request.security() Syntax

Now better supports multiple series, conditional calls, and has clearer error handling.

Arrays and array.from()

Allows for dynamic creation and updates to arrays:

arr = array.from(close, close[1], close[2])

Function Declaration and Struct Usage

You must now declare types in functions. Also, struct support is now stricter and cleaner.

Common Errors in Pine Script v6 & Fixes

1. Type Error

Cannot use 'na' as float

Fix: Declare variable with a type like float x = na

2. No Ticks Error in request.security()

Fix: Avoid symbols with no recent trade data; choose more active pairs.

3. Deprecated Functions

Older plotshape() parameters might break. Rewrite using new standard.

Best Practices & Tips

When debugging your scripts, it’s best to use print() statements or create visual markers with label.new(). These tools help track variable values and logical flow directly on the chart.

Avoid hardcoding specific bar indexes in your loops or condition checks. This makes your script more dynamic and less prone to errors when market conditions or symbol data change.

Always reserve the varip keyword for tracking values that should only update on the live bar. This ensures accurate behavior in real-time trading environments without affecting historical bar calculations.

Changelog Summary for Pine Script v6

New: Pine Script v6 introduces the varip keyword, support for typed functions, and an improved security() function with better context control and error clarity.

Changed: Array handling has become more robust and feature-rich, and function declarations now require explicit type definitions, promoting safer and cleaner code.

Removed: Support for legacy loose typing has been phased out, along with certain auto-detected series handling, encouraging developers to follow more structured and predictable scripting practices.

Frequently Asked Questions

Q1: What is the latest Pine Script version in 2025?
A: Pine Script v6.

Q2: What are the biggest changes in Pine Script v6?
A: Type safety, varip, array enhancements, request.security update.

Q3: How is the syntax different in v6?
A: v6 requires type declarations and structured functions.

Q4: What are common syntax errors in v6?
A: Mostly type mismatch, missing type declarations, or deprecated method usage.

Q5: Can I still use Pine Script v5?
A: Yes, but TradingView recommends upgrading for compatibility and new features.

Q6: Where can I find the official changelog for TradingView Pine Script v6?
A: On TradingView’s Pine Script documentation

Conclusion

Pine Script v6 introduces a lot of changes—both powerful and mandatory. From syntax updates to new features like varip and enhanced security() calls, adapting your v5 code is essential for keeping up. Follow this guide to avoid common errors, understand breaking changes, and leverage new functionality like array.from(), typed functions, and more.

This article is for informational purposes only. All opinions, examples, and code snippets are based on public documentation and independent analysis. Readers should verify all changes with the official Pine Script documentation before implementing them in live trading strategies.

4 Simple Steps to Start Paper Trading in TradingView in 2025

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5 Simple Steps to Start Paper Trading in TradingView in 2025

If you are someone who wants to learn trading without using real money, then paper trading is the perfect choice for you.

TradingView is one of the best platforms available in 2025 for paper trading. It gives you live charts, technical tools, and a demo account to practice trading safely.

In this article, you will learn how to start paper trading in TradingView in just 4 simple steps. We will also cover how you can practice Bitcoin trading in TradingView.

What is Paper Trading?

Paper trading means practicing trading with virtual money. You can buy and sell stocks, cryptocurrencies, or forex without risking your real cash. It works just like real trading, but all the profits and losses are fake.

This is a great way to learn how the market works and test your strategies.

Also Read – What is the difference between ICT and SMC?

Step-by-Step Guide to Start Paper Trading in TradingView

Step 1: Create a Free TradingView Account

To get started, visit tradingview.com and sign up with your email ID.

You can also use your Google, Apple, X or Facebook account to create an account.

Once you verify your email, your free TradingView account will be ready.

TradingView homepage after creating an account

Step 2: Use the search bar to open a chart for the asset you want to trade.

After logging in, go to the search bar at the top of the screen. Type the name or symbol of the stock or cryptocurrency you want to practice trading.

For example, if you want to do paper trading in Bitcoin, type BTCUSDT, select the one from the Binance exchange, and launch the chart.

BTCUSDT Search Result on TradingView

Step 3: Go to the trading panel below and connect to Paper Trading.

Go to the trading panel and connect to Paper Trading.

At the bottom of the chart screen, click on the “Trading Panel” tab.

You will see a few broker options. Find the one that says “Paper Trading – Brokerage simulator by TradingView” and click “Connect.”

Your paper trading account will now be active, and you will receive virtual money to practice with. Normally, TradingView gives $100,000 in fake funds for practice, but you can adjust this amount based on your needs.

Step 4: Place Your First Trade

Once your account is connected, you can place a trade.

Just right-click on the chart at the price where you want to buy or sell. Choose “Buy” or “Sell,” then adjust the Buy/Sell price to your desired level. You can choose the order type as either a Limit Order or a Stop Order.

After that, click on the Buy or Sell button. Your first trade is now live using virtual money.

You can also use the red and green buttons on the top left corner of the chart for Sell and Buy orders respectively. Adjust the trade parameters within that window and click “Order.”

At the bottom of the screen under “Paper Trading,” you’ll find tabs like “Positions,” “Orders,” and “History.” These tabs show your open trades, profits or losses, balance, and order history.

You can close trades from here as well, and review your past trades to see what worked and what didn’t.

Also Read – Grok 3 for Trading Strategy-A Game Changer for Traders

Please watch the video here if you’d like a visual guide –

Why Paper Trading is Helpful?

TradingView allows you to experience real-time price movements without using real money. You can use all the technical tools available on the platform and test your strategies.

This helps build confidence before you move to live trading. It also helps you understand how orders, stop-loss, and take-profit work in a real market situation.

The Bottom Line

Paper trading is the safest and smartest way to start your trading journey. TradingView makes it super easy for anyone to practice. Whether it is stocks, forex, or cryptocurrencies like Bitcoin, you can test everything without any risk. Just follow the steps explained in this article and you’ll be ready to trade like a pro – with zero risk. Practice regularly and you’ll gain the confidence you need for live trading.

This article is for educational purposes only. Trading in financial markets involves risks. Please learn properly and consult an expert before investing real money.

6 Easy Steps to Run Pine Script v6 in TradingView

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TradingView provides its own programming language called Pine Script, which is used to create indicators and strategies prominently. The latest version released by TradingView for Pine Script is version 6, which comes with extra features.

If you’re interested in learning how to build and test your own trading indicators or strategies, Pine Script is the tool for you.

Pine Script is the coding language used in TradingView, one of the most popular charting platforms for traders.

TradingView recently introduced Pine Script version 6, which comes with more features and improvements.

But many beginners ask this common question: “How do I run Pine Script v6 on TradingView?”
Don’t worry. In this article, we will walk you through every step in a simple way. No complicated language. Just clear, beginner-friendly instructions.

What is Pine Script?

Pine Script is a programming language created by TradingView. It is used to create custom indicators, alerts, and strategies on charts.

For example, you can make your own Moving Average, RSI indicator, or even backtest a buy-sell strategy using Pine Script.

What’s New in Pine Script v6?

Version 6 of Pine Script includes some major updates:

  • Better performance and speed
  • New built-in functions and features
  • Cleaner and more flexible syntax
  • Easier to write and read code

If you are starting fresh, it’s always good to begin with the latest version.

Step-by-Step Guide to Run Pine Script v6 on TradingView

Let’s now look at the actual steps to run Pine Script v6.

Step 1: Open TradingView

First, visit www.tradingview.com. You can use the free version or sign in with a free account.

Once you’re on the site:

  • Click on “Chart” at the top.
  • This will open the TradingView chart screen.
Step 2: Open Pine Editor

At the bottom of your chart screen, you will see a tab named “Pine Editor.”

  • Click on it to open the Pine Script editor.
  • This is where you can write and run your code.
Step 3: Write or Paste Your Pine Script Code

Now it’s time to enter your Pine Script code.

To use version 6, make sure your script starts with this line:

//@version=6

Let’s look at a very basic example:

//@version=6
indicator("Simple MA", overlay=true)
ma = ta.sma(close, 14)
plot(ma, color=color.orange, title="14-period MA")

This code will create a simple 14-period moving average.

Step 4: Add Script to Chart

Once you have written the script:

  • Click on the “Add to chart” button (above the editor window).
  • This will apply your custom indicator or strategy to the chart.

If there are no errors, the script will run smoothly, and you will see the result on your chart.

Step 5: Save Your Script

Always remember to save your work.

  • Click on the “Save” icon.
  • Give your script a name like “My First Script.”

This way, you can come back later and make changes.

Step 6: Fix Any Errors (If Any)

If your script doesn’t run and shows an error:

  • Read the error message below the editor.
  • Double-check your syntax (correct version, brackets, etc.)
  • Use the TradingView Help Center or forums for help if stuck.

Also Read – 5 Best AI Tools for Pine Script to Supercharge Your TradingView Strategies (2025)

The Bottom Line

Running Pine Script v6 in TradingView is not as hard as it sounds. Once you understand the steps, it becomes very simple.

Whether you want to create your own custom indicator or test a trading idea, Pine Script can help you a lot.

Start small. Experiment. And with time, you’ll become more confident in creating your own trading tools.

What Does “OI Spurts” Mean in the Stock Market?

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What does the term OI spurt mean?

If you’re new to trading, the term “OI spurt” might seem like jargon from a complex world. Don’t worry—let’s break it down into simple, digestible pieces so you can understand and use it effectively in your trading journey.

What “OI Spurts” Means?

The term spurt means a sudden or quick increase.

An “OI spurt” refers to a sudden, sharp increase in Open Interest (OI) for a stock’s futures or options contracts. It’s like a flashing neon sign in the market, signaling that traders are placing aggressive new bets on where a stock’s price is headed next. This surge in activity often hints at potential volatility or significant price movements, making it a key indicator for traders to watch.

Understanding the Key Terms

  1. Open Interest (OI)
    Open Interest (OI) is the total number of active, unsettled futures or options contracts for a stock. These contracts represent “live bets” that traders have placed on the stock’s future price, which haven’t yet been closed, exercised, or expired. When traders open new positions—whether buying or selling a contract—OI increases. When they close their positions (e.g., by offsetting or exercising the contract), OI decreases. In essence, OI shows how many contracts are still “in play” in the market, reflecting the level of trader commitment.
  2. Spurts
    A “spurt” is a rapid, explosive increase, like water bursting from a hose or a runner sprinting off the starting line. In trading, an OI spurt occurs when the number of open contracts jumps dramatically—typically by 20% to 50% or more—within a short timeframe, such as a few hours or a single trading day. Unlike gradual increases over weeks, an OI spurt is sudden and significant, grabbing the attention of traders looking for market action.

In short: An OI spurt is a rapid surge in active futures or options contracts, indicating fresh bets on a stock’s future price movement.

Why OI Spurts Matter?

OI spurts act like a market alarm, alerting traders to a wave of new activity. They often suggest that big players—like institutional investors, hedge funds, or large traders—are entering the market with strong conviction, opening substantial new positions. This influx of activity can lead to increased volatility and the potential for significant price swings.

While an OI spurt doesn’t guarantee a price move, it’s a clue that something big might be brewing, especially when paired with other market signals like price trends or news events.

How to Read OI Spurts?

To make sense of an OI spurt, follow these three straightforward steps:

Step 1: Confirm the Spurt
First, verify that the OI increase qualifies as a “spurt.” Look for:

  • Magnitude: A sharp rise in OI, typically 20–100% in a single day. For highly liquid stocks, even a 10–20% jump can be notable, while less liquid stocks may need a larger surge (e.g., 50%+) to stand out.
  • Timeframe: The increase happens quickly—within hours or a single trading session, not spread over days or weeks.

Step 2: Combine with Price Action
OI alone doesn’t tell you whether the price will go up or down. You need to pair it with the stock’s price movement to understand trader sentiment:

  • OI ↑ + Stock Price ↑: Traders are opening new long positions, betting the stock price will rise (bullish sentiment).
  • OI ↑ + Stock Price ↓: Traders are opening new short positions, betting the stock price will fall (bearish sentiment).
  • OI ↓ (No Spurt): Traders are closing existing positions, which is less significant for predicting future price moves.

Step 3: Add Volume for Confirmation
Trading volume—the total number of shares or contracts traded in a day—helps confirm the strength of an OI spurt:

  • High Volume + OI Spurt: Indicates strong new interest and a reliable signal of potential price movement.
  • Low Volume + OI Spurt: May be less impactful but can still be significant if driven by major news (e.g., earnings reports, mergers) or in less liquid stocks. Always check for external factors like market events or company announcements to validate the spurt’s importance.

OI Spurts vs. Volume: Don’t Mix Them Up!

It’s easy to confuse OI with trading volume, but they’re distinct:

  • Volume: Measures the total number of shares or contracts traded in a day (e.g., 1 million shares traded). Think of it as “how many pizzas were sold at a shop today.”
  • Open Interest (OI): Counts the number of contracts still open at the end of the day (e.g., 50,000 unsettled futures or options contracts). It’s like “how many pizza orders are still active and haven’t been delivered or canceled.”
    An OI spurt is a sudden spike in these “active orders,” signaling fresh market activity, whereas volume reflects the overall trading frenzy in a day.
Tips for Beginners

OI spurts are powerful, but they’re not a standalone signal. Here’s how to use them wisely:

  • Never trade on OI alone. Always cross-check with:
    • Price trend: Is the stock rising, falling, or consolidating?
    • News and events: Look for catalysts like earnings reports, mergers, sector trends, or macroeconomic events (e.g., RBI policy changes in India).
    • Market context: OI spurts during major events (e.g., budget announcements) are more significant than those on quiet days.
  • Focus on large-cap stocks like Reliance Industries, Infosys, or HDFC Bank. These stocks have higher trading volume and more reliable OI data compared to smaller, less liquid stocks.
  • Start with near-the-money (NTM) or at-the-money (ATM) options, as these typically have higher OI and liquidity, making spurts easier to interpret.
  • Use end-of-day OI data for clearer signals. Intraday OI can be noisy and less reliable due to fluctuating activity.
  • Leverage free tools to track OI:
    • NSE India’s Option Chain: Shows real-time OI for options and futures (nseindia.com).
    • Moneycontrol: Offers OI data and market news (moneycontrol.com).
    • Trading platforms: Tools like Zerodha’s Kite or Sensibull provide user-friendly OI visuals for Indian markets.

The Bottom Line

An OI spurt is a surge in active futures or options contracts, signaling heightened trader interest and potential for volatility in a stock’s price. For new traders, spotting OI spurts and combining them with price action, trading volume, and news can unlock valuable insights into market sentiment. However, it’s not a magic crystal ball—it’s one tool in your trading toolbox. Pair it with technical analysis (e.g., support/resistance levels) and fundamental research (e.g., company performance) to make informed decisions. With practice, you’ll learn to decode OI spurts and use them to navigate the exciting, fast-paced world of trading.