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

This questions comes in the mind of those trader who are either newcomer in stock market or making plan to enter 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 75. 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 75 , suppose for example Nifty Future Sep 2018 contract currently running on 11500 and you want to buy this , so your trade value will be

75 (lot size) x 11500 (index future current value) = 8,62,500 (Total trade value)

So does it means you require Rs. 8,62,500 to buy or sell Nifty Future ? Answer is NO. To trade in Nifty Future, some margin required only . Generally it comes around Rs. 60000 to Rs. 70000 per lot. If stock market becomes very volatile then exchange can increase the margin also.

So if you have Minimum Rs. 70000, 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 , 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 27 Sep 2018, it means you will have to square off your position on or before 27 Sep 2019. If you will not, then exchange will settle it in last.

Let us take one example :-

Suppose you bought today Nifty Future at 11500 on 14 Sep 2018 and sold next day at 11550 , it means you gained 50 points, so your profit will be

75 (lot size) x 50 (Gained point) = Rs. 3,750 (Profit)

Suppose you bought today Nifty Future at 11500 on 14 Sep 2018 and sold out same day at 11475, it means you lost 25 points, so your loss will be

75 (lot size) x 25 (point you lost) = Rs. 1,875 (Loss)

Suppose you Sold today ( Shorted ) Nifty Future at 11500 on 14 Sep 2018 and bought (covered ) same day at 11460 , it means you gained 40 points, so your profit will be

75 (lot size) x 40 ( Gained point) = Rs. 3,000 (Profit)

Suppose you Sold today ( Shorted ) Nifty Future at 11500 on 14 Sep 2018 and bought (covered ) after 5 days at 11600 , it means you lost 100 points and your loss will be

75 (lot size) x 100 (point you lost) = Rs. 7500 (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 "stocknifty@yahoo.com" or call at +919981722011.