5 Key Tools for Nifty Futures Traders

Are you inspiring to trade or invest in Markets? Do you want to follow the trends of the most prominent economic indexes in the Stock market? Deciding to join trading is not that simple. It is an imposing task if you are a beginner and don’t know where to start and the risks you are to take.

The National Stock Exchange Fifty (Nifty) is an indicator for NSE. India Index Services and Products Ltd is the owner of Nifty. The indicator has a basket full of 50 stocks. If you think the price will go up, buy a futures contract. And if you think it will go down, sell a futures contract. Nifty is a good representative of India’s larger economic activities and a better alternative for traders than the single stock futures.

The essentials of Nifty trading are a no-brainer. Tips2Trade is offering Nifty training in Mumbai. The courses include Bank Nifty Swing 9:30 a.m. Strategy, Nifty 50 Stocks strategy, and many more strategies.
The concepts are the same in stockbroker houses. But to take part in Nifty futures trading, it’s important to know the key tools you can use. Let us look at some tools for Nifty.

1. Advance-decline line chart

The line chart shows the proportion of advancing to declining issues and ratio is always a constant number. The decline formula is,

Advancing issues
Declining issues

If the scale is greater than 1.25 then it’s bullish. For a bearish choppy market, the rate is between 0 and 1. And for a bullish market, the proportion is greater than 2.

2. Open-Interest Analysis Chart

Traders use this to confirm the trends for futures and options. It presents substantial insights as per the market trends. A rise in an Open-interest with the price is an upward trend. A downward trend is when an increase in Open Interest (OI) and a decrease in price occur. If you are seeking a trend reversal, check a progress or decrease in price while the OI is the same or is falling.

3. Open click trade

Allows you to open and close a trade by using one click. Once you enter the trade, it will do a process for either selling at once. It‘s the best choice for Nifty Traders who want to speed the trading.

4. Moving average method

It is the simplest tool to use as this makes trading easier to spot trends and illustrates the current direction of a lag. There are two types of this form:

  • Simple moving average – is done by computing the average price of a security over a certain period.
  • Exponential moving average – current EMA= (Current Price – Previous EMA x Multiplier) + Previous EMA)

5. On Balance Volume (OBV)

It acts as a confirmation tool for the price trends. When OBV and the price trends move in opposite directions, then the possibility of a price trend reversal is high.

In short, tools for Nifty Futures Trading are many. You have to choose the one that meets your needs and suits you best.

1st October 2018

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