Before looking into the guidelines of trading in Nifty futures, we shall look what a Nifty future is.
“A nifty future is a contract/ agreement signed between two parties in reference with the selling and purchasing of shares of a company at a future time.”
Now, how is the price of a contract decided?
It is decided on the present date when the ownership of share will exchange on a future date.
NSE of the Indian share market was introduced by Nifty which in an Index.
Top 5 Nifty futures trading tips
Some of the best nifty futures guidelines are classified below
1. Trading is a very risky business as such. Therefore, it is really significant to make sure one gets their specifics right before taking the jump and investing money.
There are only a small number of shares that can be future traded on and traders can buy or sell futures on those picky shares only.
Watchfully go through the list given by the broker and mark the stocks that can be future traded before investing.
2. All futures trading have an expiration dateIn India, there are guiding principles as to when can futures be bought.
A. When the expiration date is continuing month.
B. When the expiration date is in the coming month.
C. When the expiration is in the third month.
Any future contract expires on the last Thursday of a given month.
Hence, it keeps track of the expiration date before signing a future contract.
3. Futures are always bought in lots and not individually. Henceforth, a trader also has to buy futures from a company in lots but the vivid side being the payment made is only the marginal amount which is much lesser than the cost of the whole lot.
This also varies from share to share. If the stock is unpredictable, the margin amount is more and in case the share is less volatile, the marginal amount is reasonably lesser.
4. The benefit of future trading trading is that the future can be sold at any given time before the expiration date and on the expiration day, the cash of the future will be settled which means two outcomes.
A. The trader pays the differentiation in case of a loss or
B. The trader is paid the difference, in case of a profit.
5. Future contracts are always settled on a date in the future, which is a nifty trend.
This makes it likely for a trader to sell a future without owning it.
This is known as short going, which is not promising in case of a stock.