Best nifty future trading strategy
Futures Trading Strategies (Trading Futures for Dummies)
Once you know the basics you can now develop your own Emini trading strategy. Now, if you want to trade a specific commodity like corn, you got to know its contract specs to develop your corn futures trading strategy. Learn how to implement successful strategies for commodity trading amid the ongoing US-China trade war. The leverage available in futures and the low margin requirements is the reason why the futures strategy is so popular among professional traders. This means that the potential profits can be substantially higher.
Nowadays, the majority of futures markets can be traded electronically around the clock, reducing the overnight gap risk for stock index futures.
Also, check out the advantages of futures over options: Options vs. Futures Advantages — How to maximize your profits. A futures trader only needs to have enough capital required to put as margin collateral for one futures contract. The best approach to trading futures is day trading. However, fortunes have been made day trading futures. That made him the largest trader of German debt futures. Learn how to day trade online with our day trading for dummies guide.
Futures prices on a daily basis tend to exhibit a certain trading pattern. The traffic density and flow are not evenly distributed throughout the day. Usually, in the mornings, there is bigger traffic flow as people get to work and then in the afternoon, the traffic slows down. But by the end of the day, the traffic flow also gets busy.
Having this information available to use in your toolbox will enable you to develop profitable futures trading strategies. For example, early in the morning, you can catch some nice intraday trend trades or breakout trades. However, before the closing price, the futures market tends to experience intraday market reversals. As a short-term trader, you need intraday volatility to be able to extract some profits out of the market.
In order to distinguish between the prices discrepancies, we have developed a free futures day trading strategy. This futures strategy is a combination of volatility trading and breakout trading. The concept behind this day trading strategy is that futures tend to exhibit price movements of a certain size on an intraday level. Usually, this futures trading system will generate 1 signal per day. The rules of this system are based on the previous trading day high and low prices.
Buy futures contracts if we break above this breakout range and sell futures contracts if we break below the breakout range. The default target is measured by simply adding the trading range to the opening price, while the protective stop loss is placed on the opposite side of the trading range. Nifty options are of two types —call and put options.
Advantages of Nifty Future Trading
Nifty is an index computed from performances of top stocks from different sector listed on the National Stock Exchange NSE. NIFTY normally comprises of 50 stocks but right now there are 51 stocks. Nifty Futures Trading Nifty futures are a contract that gives its buyer or seller the right to buy or sell the Nifty 50 index at a preset price for delivery at a future date. It is the lowest risk taking in the market. The amount of risk is so small that trader do not need to worry at all.
Two things you need to remember here. Understand the logic of the spread before trading Nifty futures. Nifty futures are leveraged like all futures positions. That means you get 10 times leveraged in a normal trade and 20 times leverage in intraday trades. This works both ways. Leverage means that your profits can get multiplied but losses can also get multiplied. Hence any trading in Nifty futures has to be done with strict stop losses and profit targets. It always pays to do some scientific data analysis before taking a Nifty futures position. A quick look at the open interest of the Nifty futures and its accumulation trends will give you an idea of whether the open interest is building on the long side or the short side.
You can take a more informed view on the Nifty direction. Liquidity is never a major challenge for the Nifty futures as it is one of the most liquid contracts but there are occasions when the Nifty futures can get into your liquidity trap.
Best bank nifty future trading strategy for beginners in Indian stock market by Nifty Trend - Issuu
Firstly, on the expiry day you will normally find the volumes on the Nifty futures vanishing once the rollovers are substantially completed. Also, in a market that is falling very sharply, the spreads can widen substantially increasing your risk in trading Nifty futures. Whether you buy Nifty futures or you sell Nifty futures, it is a linear position as it can lead to unlimited profits and losses both sides. While stop losses are a must when trading the Nifty, one also needs to understand the margins. Firstly, there is an initial margin you pay at the time of taking the position which includes the VAR margin and the ELM margins.
Now it is mandatory for brokers to collect both these margins and ELM is no longer optional. Secondly, on a daily basis you need to pay MTM mark to market margins based on the price movement.
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