NIFTY
What is Nifty and how trading is done?
- Nifty (S&P CNX Nifty) is the Index of Indian share market on NSE (National Stock exchange) like Sensex on BSE (Bombay Stock Exchange)
- Trading is done on Nifty contract which is also called as Nifty future derivative.Nifty derivative movement is based on Nifty index.In stock market language it is called as “underlying of Nifty future contract is S&P CNX NIFTY Index.”
- Nifty Lot Size - Nifty derivative consist of a lot of 25* quantities of Nifty (as on date). So if you want to buy Nifty contract then you have to buy at least one lot.The trading in Nifty contract is done in lots.
- Nifty Expiry - The Nifty derivative expires last Thursday of every month. In India we have three month future derivatives for trading.For example - In the month of October, we have October, November and December month series of Nifty derivative for trading. Current month derivative will have more liquidity (more volumes) as compared to other two months derivatives. A new contract is introduced on the trading day following the expiry of the current month contract. If the last Thursday is a holiday then contracts expire on the previous trading day.
Advantages of trading in Nifty
- Trader get margin to trade on Nifty. For example - Nifty derivative consist of 25* quantity of Nifty index so the cost of one lot will become Rs 2,10,000 [25 qty of Nifty multiple by the closing price of Nifty index, which is 8400 current closing price]. Please note - You need to have 15% amount of the entire cost to trade in Nifty future contract. Approximately it comes to Rs 31,500. b) Small traders can even buy Mini lot of Nifty contract.
- You can do day trading (Intraday trading) as well as carry forward (hold your nifty positions) till the expiry period of your contract (minimum one month expiry and maximum three month expiry)
- 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.
- Very Low brokerage rates. Low brokerage rates increases your profit percentage. We are offering 0.01% for buying and 0.01% for selling. If you are interested to open the Demat account with us then please Contact us.
- High liquidity - Very high volumes are traded in Nifty future contract which will make the trader to square off at any time and at any price. ie.Based on your trading position your account will get adjusted on daily basis as per the closing price of Nifty derivative contract. Thats called MTM basis.
For Example - If you buy one lot of Nifty at 8400 and Nifty closes at 8450 then Rs 50 as profit (total profit will become 25*qty x Rs 50 = Rs 1250) will get credited in your account. On the other hand if Nifty went down Rs 50 then Rs 1250 will be debited from your account.
If you do not have balance in your trading account then very next day your position will be squared off by your broker. Some brokers provides some extra days to transfer money in your trading account. - If you buy and sell on a same day then the profit and loss will be adjusted in your trading account accordingly.
- Trader has to square off the positions before or on expiry. If you does not square off then the contract expires on the expiry date and the money gets adjusted in your account.
- You can buy and sell Nifty derivative contract in your trading account/terminal. Separate account is not required.
Risk Involved in Nifty trading
Trading in Nifty future is a risky, heavy loss can occur. Basically trading involves big risk either you trade in Nifty future or in any other future contract or in stocks. Trading requires lot of experience and market knowledge. Investing and trading are two different factors in share market. Investing is not as risky as trading.*Lot Size or Quantity keep changes from time to time, as per SEBI & exchanges rules.
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