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Things to Consider While Trading in Nifty

  • Posted Date: February 16, 2022

There are a lot many things that you need to consider while trading in Nifty or in the Nifty future. But before knowing anything you need to understand what is Nifty and nifty future so that you can invest in them smartly and effortlessly.

Nifty is also known as the National stock exchange fifty. Nifty is the benchmark index of the NSE. This is composed of the top companies across various industries and sectors that are listed in the NSE.

Nifty future has a very special place in the Indian derivatives world. These are some of the most traded futures instruments, thus it has become the most liquid contract in the Indian derivatives market.

How to trade in nifty?

The main reason why Nifty is considered to be a good indicator of the performance of the stock market is due to the fact that nifty is used to cover the 14 different sectors across the companies. Since Nifty is an index you cannot directly purchase like a stock of the company. There are different ways of trading in the nifty are:

  • Making the investment in Nifty via future contracts.
  • Making the investment in Nifty using the derivatives.
  • Making the investment through options contact.
  • Making an investment in the nifty through mutual funds.

Nifty future trading strategies 

Here are some of the Nifty future tips or you can say strategies that you need to consider while trading in the Nifty futures is as follows:

  • Nifty futures are at the leveraged position like all other future positions so you need to treat it accordingly.
  • You need to check the future spreads over the spot before doing the trading.
  • Avoid getting stuck in the liquidity trap of the nifty futures.
  • Beware that risk can come at any time while investing in the nifty futures so that you can avoid the chances of losses.
  • Before trading, understand the trade from the perspective of counterplay.

How to trade in a nifty intraday?

Intraday trading starts when the stock market hours opens and ends on the same day when the stock market gets closed. This provides the facility of liquidity and volatility in trading in the stock. Steps for trading in the nifty intraday are as follows:

  • Choose a brokerage firm and open a Demat account and trading account.
  • After that, study the graphics and understand the layouts of the graphs of the site in which the Demat account has been opened.
  • Learn about intraday trading and the stock market before starting the trading.
  • Select the right entry and exit point for a nifty intraday.
  • Get the help of the right mentor to get the right direction.

How to deal with nifty futures?

Nifty futures are used to derive their value from the nifty index. If the value of the nifty index increases, then the value of the nifty futures will also increase and vice versa. So you have to keep a check on the nifty index while trading in the nifty future so that you can avoid risk and loss.

Nifty futures trading formula

Here you go with the formulas that are used for trading in the nifty futures which will also help you know the profits you are going to earn and avoid the loss.

Future pricing formula

Futures Price = Spot price *(1+ rf )– d

D- Dividend

rf- Risk-free rate

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