1) What is Nifty and how trading is done? a) Nifty (S&P CNX Nifty) is the Index of Indian stock market on NSE (National Stock exchange) like Sensex on BSE (Bombay Stock Exchange)
b) Trading is done on Nifty and it is called future derivative contract or future contract. The movement of Nifty derivative is based on Nifty index. In stock market language - Nifty index is called as “underlying of Nifty future contract” because Nifty future contract is based on Nifty index movement.
c) Nifty Lot Size - Nifty future derivative consist of a lot of 75 quantities of Nifty. So if you want to buy a Nifty contract then you have to buy one lot of Nifty. The trading in Nifty contract is done in lots.
d) Trading cycle NIFTY futures contracts have a maximum of 3-month trading cycle - the near month (current), the next month and the far month. A new contract is introduced on the trading day following the expiry of the near month contract. The new contract will be introduced for three month duration. This way, at any point in time, there will be 3 contracts available for trading in the market i.e., one near month, one next month and one far month.
f) Based on your trading position your account will get adjusted on daily basis as per the closing price of Nifty derivative contract. For Example - If you buy one lot (75 quantity) of Nifty and strike at 8000 and Nifty closes at 8050 then Rs 50 as profit then your total will be 75 qty x Rs 50 = Rs 3750. If you are interested you can visit - How to get profit in Nifty trading on daily basis?
G) You can buy and sell on a same day or hold till expiry of your future contract. You can even sell first and buy later and this is called as short selling.
H) Trader has to square off the positions before or on expiry. If you do not square off then the contract expires on the expiry date and the money gets adjusted in your account.
h) You can buy and sell Nifty derivative contract on any day of any month means of current month or next month.
2) Advantages of trading in Nifty a) Trader get margin from broker to trade on Nifty.
For example - Nifty derivative consist of 75 quantity of Nifty index so the cost of one lot will become Rs 645000 [75 qty of Nifty multiple by the price of Nifty index, which is 8600 current price of 27 July 2016.
Please note - Trader need to have only 12% (approx) amount of the entire cost to trade in Nifty future contract so you need only Rs 75,000 (approx). For latest prices please talk to your broker.
b) You can do day trading (Intraday trading) as well as carry forward (hold your nifty future contract) till the expiry period of your contract expiry date. You can buy expiry of 3 months Nifty contract.
c) You can trade both sides of the Nifty means if you feel market is going up then you can buy Nifty contract and if you feel market is going to fall then you can short sell Nifty and later buy it to cover up your positions.
d) Very Low brokerage rates. Low brokerage rates increases your profit percentage. Currently we have tie up with one of the reputed broker and they are offering flat Rs 20 for buying and selling.
e) High liquidity (volumes) - Very high volumes are traded in Nifty future contract which will make the trader to square off at any time and at any price. If you only take 10 points as profits then you can earn good money at the end of the month. For more information please visit at How to get profit in Nifty trading on daily basis?
3) Risk Involved in Nifty trading Trading in Nifty future is a risky job. As good profits are taken in Nifty trading and losses are also quite possible.
Basically trading involves big risk compared to investing in stocks. Either you trade in Nifty future or in any other future contract or trade in stocks. Trading requires lot of experience and market knowledge. Investing and trading are two different factors in stock market. Investing is not as risky as trading.
For trading trader needs to be aware of domestic as well as international markets to make good profits.
For example - From Mar 2016 to Aug 2016 - Nifty has moved from 7200 to 8700 so it comes to around 1500 points and that comes to around 200 points each month. If you can understand the markets both locally and internationally. Because during this phase, international markets like US and other Asian markets have also moved up.
4) Techniques to get profits in day trading Trading on daily basis requires market knowledge and experience and also some techniques. Movement of stocks and indices in day trading is based on various domestics and international factors so traders need to be very alert and quick in day trading. If you plan to take small profits and make multiple trades then the success rates are very high and your monthly profits will be good. For more information visit at how to take daily profits and end your month in good profits
5. Details about Nifty and option trading If you are looking for more in depth knowledge about future derivative trading and all other details about options and risk involved with examples then please visit NSE Future page - For options trading strategies and techniques - please visit NSE Options page -
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e) Expiry day CNX Nifty futures contracts expire on the last Thursday of EVERY month. If the last Thursday is a trading holiday then contract expire on the previous trading day.