What is the most popular Indian Index, that Traders Like The Most?
Nifty 50 is the most popular index in India for sure. Even though the Sensex is the oldest, due to FnO segment and better liquidity we see traders preferring Nifty Share Price over other indices. According to latest Market Pulse Report from the nseindia.com official website, average daily volume for equity segment has already crossed INR 25000 Crores. whereas Equity Derivatives volumes are fast approaching INR 100,000 Crores.
With such huge participation, it becomes a great place to find liquidity. Hence traders from all walks of life are attracted towards Nifty and Index Futures and Options.
You can find the latest Components of Nifty 50 Index here.
Click Here: Live Charts [Nifty, Banknifty, Stocks]
How do I use this information to trade Nifty Share Price?
Well from the above information you get the broad idea about what exactly Nifty 50 index is. Now you cannot trade the Nifty 50 index directly since it is a fancy average of 50 most liquid companies on National Stock Exchange, India. But we have products that are derived from this base index and can be traded easily. These are called the derivatives [futures, options, spreads].
A disclaimer is in order here, Derivatives Trading involves substantial risk of loss therefore is not suitable for all investors. Past Performance is not necessarily indicative future results. All information shared here is for educational purpose only.
What is required to trade in Nifty Share Price Derivatives? [FnO]
First thing you must remember is that Index Derivatives are leveraged products, ie. You dont have to pay the full value of the purchase to trade in them, you can trade by paying a certain percentage of the full value as margin and enjoy profits or bear the losses on the full value.
This feature makes them especially attractive to the speculators. Speculators who bet on the changes in price of these instruments and try to profit from them. Now there is nothing wrong in doing that, but the original purpose of these derivative products was to give ability to hedge.
Although speculation promises to be very lucrative financially, some of the very best minds are active in these markets. Its not easy to beat these professional traders to make money in derivative trading. So before you start to use these leveraged product and enter a very competitive world of Trading Nifty Share Price.
But as we move towards a possible solution to this problem, let me warn you of the umpteen snake oil salesman in this arena. Always beware of a few catch phrases “guaranteed profits” “sure shot tips” ‘automatic trading systems with unbelievable success ratios”. These are all traps to catch gullible investors and traders and strip them of their hard earned money.
The best investment you can make is always in yourself – Warren Buffet
Why does this matter…..
To trade successfully in Indian Markets and specifically the Nifty Share Price you need to have following things,
A “STABLE TRADING PROCESS”. A process which takes into account all the vital factors that affect the movement of these financial instruments.A trading method which takes “LOGIC” into account and does not blindly depend upon the repetition of patterns (which seldom repeat exactly by the way).A set of Risk Management Principles which not only tell you “where to put your STOP LOSS”, but also tells you “HOW MUCH to trade”.A reliable method to book profits telling us “WHEN TO GET OUT”.
Now you might say every other book, every other website and every other trader is saying the same thing. What is different here? Well the only thing different here is that we have always striven to find answers to these questions by using “LOGIC” as the foundation. Whereas most of the methods are merely pattern recognition systems.
Its true that pattern recognition is there in all types of analyses but, here we try to find the logic behind the formation of that pattern. We try to find out the the time frame of the traders who were responsible for this to happen. And lastly we try to find and be on the side of Smart Money.
I cant emphasize enough…..
The four major components or tools that we use to trade these extremely volatile and competitive markets are as follows,
We use the above methods because they provide us with sound logic to take decisions in live markets. when the pressure get high, it becomes really difficult to remain objective, but these tools have stood the test of time and have given us the confidence to trade in live markets. As a full time trader myself, I can say that, having a system based on logic is indispensable in such competitive markets.
So here’s The Deal…..
Nifty Share Price Trade Example 05-24-17
Lets look into the Nifty Share Price Analysis for 24th May 2017.
In the above chart for Nifty 50 we have outlines Potential Auction Paths [PAP]. We use these PAPs to give us a benchmark for the next days trading. I also prepare a daily video log wherein I go through the days development and also cover these PAPs. So based on our analysis of 24th May we felt that one of the possibilities was a sharp rally. We had marked multiple references to the upside which might be tagged if this PAP was elected by the markets.
Since we do not have occult powers so we cannot predict what markets will do the next day, but we sure can be prepared for what may happen the next day.
Those who were aware of this possibility sure had an edge over their competition. See how the Nifty Share Price developed the next day.
Now there are many principles at play on this day. Look at the bottom part it looks like a ‘P’ and then we have a big move away from it. So it was our favorite pattern ‘P’+New Biz, which gave us this great move.
How can you actually use this…..
Now I have not shared this trade to brag, but just to show that we dont rely on patterns to repeat, but track the markets in real time using Auction Market Theory Core Principles [We use 5 Core Principles, 3 Smart Money Objectives]. By using this framework we are able to remain objective even in the most volatile situations.
And I am about to finish my current project “Market Profile – Gateway To profits” course. This course is designed around the Market Profile Framework that will help you put all this seemingly confusing information available on the internet into a cohesive decision making process and really reap the benefits.
Thats not all…..
So what can you do “now” to get in sync with the Smart Money, to understand what is Auction Market Theory and to start using these fantastic tools such as Market Profile, Order Flow and VSA. Well you can do the following things to start with.
Sign up to our mailing list [click here] and receive latest updates right into your inbox.Join the Slack Group [you will get the link upon sign up to our mailing list] and get the updates in real time on Nifty and Banknifty.Read out blog for interesting posts on various topics discussed above as well as daily updates.Subscribe to our YouTube Channel to watch the video logs of daily updates as well as a few of our webinars on above topics.And you can get in touch with me on any of the Social Media Platforms [Check At The Top For Social Media Icons – Click and Connect].Dont hesitate to use the Contact Form or the Chat Widget to get in touch with us, we are always up for a nice chat.
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