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What is Nifty Future ? How to trade in Nifty Future ?
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What is Nifty Future ? How to trade in Nifty Future ?

These questions comes in the mind of those trader who are either newcomer in stock market or want to come in stock market but do not know what it is actually NIfty Future. But they have listen this word number of times.

So as we know there is National Stock Exchange, one of the main stock exchange of India. Most of the companies registered in this stock exchange and through this stock exchange we are able to do transaction in these companies stock . We are able to buy and sell the companies stock through our broker and broker registered in stock exchange.

So Index of National Stock Exchange known as Nifty. And the derivative contract of Nifty known as Nifty Future. Nifty is a portfolio of main 50 stocks and according to movement of these stock , we see the up and down movement in Nifty.

Exchanges allowing trading in stocks as well as in Index also, Example - suppose some one want to buy all the main 50 stocks of Nifty . So to make it easy exchange started trading in Nifty Future. Nifty Future lot size is 50. So one can buy Nifty Future despite to buy each Nifty stock one by one. It is also tough to watch all the 50 stocks daily. So one can buy Nifty Future and it is easy to track it.

As we said its lot size 50 , suppose for example Nifty Future Oct currently running on 5700 and you want to buy this , so your trade value will be

50 ( lot size ) x 5700 ( index future current value ) = 2,85,000 ( total trade value )

So does it means you require Rs. 2,85,000.00 to buy or sell Nifty Future ? Answer is NO. To trade in Nifty Future, some margin required only . Generally it comes around Rs. 25000 to Rs. 30000.00, If stock market becomes very volatile then exchange can increase the margin also.

So if you have Minimum Rs. 30000.00, you can buy or sell Nifty Future. It is not compulsory that you should have Nifty Future in your portfolio to sell it. You can sell it first and later you can buy it . But we suggest you, if you are new to stock market and do not have the capital of Rs. 100000.00 , then do not trade in Nifty Future.

Exchange giving you some option to trade in Nifty Future. Like you think that Nifty will jump next month and you do not want to buy current month Nifty Future, then there is next month contract also available. You can buy that contract. All the contract expires on Last Thursday of the Month. Suppose you bought Nifty Future 25 oct 2012, it means you will have to square off your position on or before 25th oct 2012. If you will not it then exchange will settle it in last.

Let us take one example :-

Suppose you bought today Nifty Future at 5700 on 15th oct 2012 and sold out next day at 5730, it means you gained 30 points and your profit will be

30 ( Gained points ) x 50 ( lot size ) = Rs. 1500.00 ( Profit )

Suppose you bought today Nifty Future at 5700 on 15th oct 2012 and sold out same day at 5680, it means you lost 20 points and your loss will be

20 ( lost points ) x 50 ( lot size ) = Rs. 1000.00 ( Loss )

Suppose you Sold today ( Shorted ) Nifty Future at 5700 on 15th oct 2012 and bought (covered ) same day at 5670 , it means you gained 30 points and your profit will be

30 ( Gained points ) x 50 ( lot size ) = Rs. 1500.00 ( Profit )

Suppose you Sold today ( Shorted ) Nifty Future at 5700 on 15th oct 2012 and bought (covered ) after 5 days at 5750 , it means you lost 50 points and your loss will be

50 (lost points ) x 50 ( lot size ) = Rs. 2500.00 ( Loss )

Now I hope that Nifty Future trading concept is clear to you. If you want to share your view with us or having any kind of query and want to ask any question then you can post it here, as soon as possible, you will get the reply.You can directly write to us to email id "smileadvisory@yahoo.com"

 
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  rajeshp.k thanks for this article 24 jan 2013, 2:40 pm
       

 

 

 

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