What is the best method to trade nifty futures?

What is the best method to trade nifty futures?

How to Trade Nifty Futures is in continuation to what is Nifty 50 Index (Nifty) & How to Trade Nifty? which guide the beginners to understand all about Nifty Index,its constituents and how to trade or invest in Nifty?

So,for those interested in trading nifty futures should learn & understand more about what is nifty and its future contract requirements & features.

Nifty Futures Liquidity:-

CNX Nifty futures contracts provide adequate liquidity for active day traders, hedge funds and longer-term traders, although volume can vary significantly from day to day.

The Bank Nifty is also active enough for most short- and long-term traders, although once again volume can vary significantly from day to day. Day traders will need to pick which days are best to trade, while longer-term traders aren’t likely to face significant liquidity issues.

The Nifty MidCap 50 usually does very little if any volume, and there is not useful information for retail traders.

How Much Margin Capital Required to Trade 1 lot of Nifty Future

Nifty future is very popular among traders, many newbies want to learn to trade nifty future. But one that hits most in mind of a new trader, it is what is capital required to trade nifty future. Though capital requirement will be as low as 8% for the index such as Bank nifty future and Nifty future.

The NIFTY 50 index National Stock Exchange of India's

benchmark broad based stock market index for the Indian equity market. Full form of NIFTY is National Index Fifty. It represents the weighted average of 50 Indian company stocks in 13 sectors and is one of the two main stock indices used in India, Day traders, swing traders, hedgers, and hedge funds all trade CNX Nifty and Bank Nifty futures. The liquid market allows for all these traders to attain and exit positions with relative ease (most days), and in quantities that suite each class of trader.

Trades are usually taken for speculative reasons, anticipating the future direction of the broader stock market (CNX Nifty) or the banking sector (Bank Nifty). Traders can profit from both up or down markets by buying or selling a future respectively.

Nifty Futures Exchange:-

Nifty futures are traded on the National Stock Exchange (NSE) of India and are cleared through the National Securities Clearing Corporation Limited (NSCCL). This clearing agency acts as a counter-party to all deals and guarantees settlement so traders can collect profits, and are responsible for losses.

About Nifty futures

Nifty futures are index futures where the order flow underlying is the S&P CNX Nifty index. In India, bank nifty futures trading initiated in 2000 on the National Stock Exchange (NSE).

For auction market theory contracts, the permitted lot size is 50, and in multiples of 50. Like additional destinies contracts, Nifty fortunes treaties also have a three-month trading progression — the near-month, the next month and the far-month.

After the expiry of the near-month contract, a replacement lease of three-month duration would be introduced on subsequent trading day. Investors can trade Nifty futures by having a margin amount in their account. This margin may be a percentage of the contract value. It’s usually about 10–12 per cent.

How to Profit in Falling Markets Using Nifty Future with Small Capital

If you are sure about some market movement, like if you know certain important support resistance levels, you can make huge amount of money even if you have small capital (INR 15,000). Here is my personal experience, I had only INR 15,000 but i know that 5180 was strong resistance and nifty future should be shorted there for sure shot gain of 50 to 70 points. I patiently waited for nifty future to trade around 5170 level; once it came there I shorted nifty future 5 lots (250 Quantity), as my offline broker gave me that limit for intraday. After making high of 5176 nifty future attracted huge amount of selling and traded at 5109 in few minutes. At this point of time I booked profit on all 5 lots (Squared off trade).
Profit from this trade was: Sell at 5170, buy at 5110 Gain = 60 points.
Now, total profit is 60*250= INR 15,000 (Without Brokerage and tax). I just doubled my trading capital on one trade.

Nifty Futures Margin:-

Opening a futures position requires that you put a margin payment. The margin required to open a position fluctuates with volatility, so it may not remain static. It is based on a Value-at-Risk model, which requires that the margin put up is large enough to cover one day’s worth of losses based on historical volatility.

These are the methods of trade in Nifty future. But it’s not necessary that you can only invest in one segment. You can also invest in some other segments like options and future stocks. There are some good stocks that can give you good money. A while ago I used to invest in only index like Nifty, Bank Nifty, But after studying stock market and books I started investing in other segments too and I have been earning a good amount of money.

Nifty Futures Pricing, Volume and Specification Information:-

For current information on Nifty futures volume and prices, and to see to when contracts are expiring, visit www.nseindia.com. Click on “Live Market” and select “Equity Derivatives.”Choose the Nifty futures contract you’d like information about. CNX Nifty and Bank Nifty futures volume and current prices are also typically available on large financial sites.