Why to trade in Nifty Future instead of Stock Future

By | September 6, 2014

During my trading session, I always ask amateur traders to start trading in Nifty Futures instead of Stocks. Here is my reasoning.

  1. You do not have to diversify with multiple stocks for equity exposure, the index is already diversified.

  2. The risk of any one stock having something catastrophic happen will not really hurt your trade. No one stock has more than a 3% weighting. 

  3. The Nifty Future  is much harder to manipulate than individual stocks due to its size and volume of trading.

  4. Nifty Future move much more smoothly around support and resistance areas than most individual stocks.

  5. Nifty 50 has its own survivor bias replacing it holding of falling stocks with new ones that are growing in market capitalization.

  6. You do not have to deal with earnings surprises like in individual stocks.

  7. Due to the indexes much lower volatility you can trade larger position sizes with much less risk.

  8. The Nifty options are very liquid with very tight big ask spreads.

  9. With this index you can trade the trend of the stock market itself which is a much broader bet than any one company or sector.

  10. Margin required for trading Nifty Future is quiet less as compared to Stock Futures

9 thoughts on “Why to trade in Nifty Future instead of Stock Future

  1. Publicum

    Kotak’s intraday & Settlement Futures Brokerages

    Futures
    Intraday brokerages Settlement
    25 crores 0.023% both sides 0.032% both sides

  2. Bramesh Post author

    I do not like reading books, market is best teacher for me.

    Rgds.
    Bramesh

  3. Ram Ganesh

    Switch to Zerodha; they charge just 20 Rs /order as brokerage( So Svc Tax on brokerage also reduces ); u will need just 3 points to break even in Zerodha and 20 Rs is for 1 lot or 100000(X) lots.

  4. Hota

    thanks for the post… now i got the answer why i always get success in niftyfutures whereas fail in stockfutures…

  5. syamala

    you can bargain with broker for a fix brokerage like 100 ruppess both sides

  6. Sanjay

    I suggest change your broker. Go for discount brokerages. They give attractive brokerage rates. Try Zerodha. Disclaimer: I am not in any way associated with Zerodha.

  7. Publicum

    Currently the main problem for small traders of Nifty Futures (particularly intraday) is the high cost. For example, at 8000 Nifty Futures the brokerage (assuming 0.04%) plus taxes works out to 8.5 Nifty points (or 4.25 points at 0.02%). So profits begin only from point number 8.5 (or 4.25 points) onwards — if not stopped out by then!
    Kindly explain at which level the lot size of Nifty Futures will be split by NSE on account of crossing a certain threshold. How is this limit set for Nifty and individual stock futures..
    Thanks.

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