How to trade in Nifty Futures

We should know a simple answer to the question, ‘how to trade in Nifty Futures?’

Trading in the Nifty started only a little over a decade ago in the year 2000. The new millennium brought this boon for serious investors in the share market. In these ten years people have worked out many strategies regarding ‘how to trade in Nifty Futures?‘ The consensus is that one should trade with middle to long term view. The nifty is the index of the best fifty companies in India.

Knowledge and Patience

The Nifty is a steady ship sailing on a sea of world’s economic activity. As the level of the sea falls, Nifty has to float down with it. This does not mean that there is anything wrong with the intrinsic worth of the 50 company shares which make up this big ship. In the beginning therefore we should know a simple answer to the question, ‘how to trade in Nifty Futures?‘ The answer is with knowledge and patience.

Near month, Next month and Far month

A trade in Nifty Futures occurs when one trader is bullish and another trader is bearish. The trade itself is for a maximum period of three months. A futures contract is virtually a bet. One trader is holding a long position while the other is holding a short position. Futures on the Nifty are traded in lot sizes of fifty shares and its multiples. The period of holding can only be for three months. These months have individual names and are called near month, next month and far month.

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Margin money and a broker

A minimum margin has to be kept with the National Stock Exchange (NSE) to credit or debit the two parties in a Nifty futures trade. This is normally twelve percent of the contract value. In our search for the answer to ‘how to trade in Nifty Futures’ one must know that a broker is necessary for one to carry out futures contracts in the Nifty.

Judgment of market trends

How to trade in Nifty Futures safely? That should be the real question. The Nifty is a very steady ship. It cruises along smoothly on its journey to prosperity. Any one desiring to trade in Nifty Futures should learn to gauge the current trend of the market and how long it will last. The market at the present time might be bearish. In that case one can sell the index short for a fixed future target and make a profit when the Nifty does fall to the expected level. On the other hand one can be long and a profit can be made as the Nifty moves higher and higher to the targeted level.

Nifty is immune to sudden jumps; go with the experts

The Nifty does not jump high or low in a single day like some individual shares. Therefore one need not be worried while seeking the answer to trading in Nifty Futures. The Nifty Index can be predicted with some certainty by experts. It is good to follow the advice of one’s broker. One’s own research is also good but in the end professional advice should be listened to.

Stick to Professional Advice

One answer is certain to the question, ‘how to trade in Nifty Futures?‘ and that is do not be fickle in your decisions. Do not sell at the slightest hint of economic trouble. The Nifty index has survived through many major catastrophes. It does go to some dangerous depths but it slowly regains its footings to its previous highs. In Nifty Futures trade only those people make a profit who buy at the right time on professional advice and also hold their Nifty Futures till advised by their brokers to sell.

The many advantages of Nifty Futures

  • One can make big profits using only margin money.
  • Easy liquidity makes investments in Nifty Futures easy to cash in dire circumstances.
  • One does not need to keep track of the individual 50 stocks that make up the Nifty. Over the years every trader in Nifty Futures learns to gauge whether the current trend is bullish or bearish.
  • There are many learned brokers who give good advice to their clients. The problem is that most clients do not stick to given advice. One should make use of this vast storehouse of knowledge and invest in Nifty Futures with the guidance of a tried and tested broker.

The final decision always lies with the investor. The best way to deal in Nifty futures is by sticking to well worked out targets. Shares in some ways have very predictable charts and they again and again touch the same highs created in the past. One should stick to professional advice. Then it is certain that Nifty Futures will lead one on to a great fortune.

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