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How Nifty Plays a Complete Role in Trading
Are you having any kind of problem on investing your money in NIFTY then i am here to solve your problems related to the topic of share market in this blog we are going to study in a brief about Nifty and how bank nifty option plays an important role in trading, first of all we all will study about Nifty and what is bank nifty option.
What is Nifty?
Basically we all call it nifty but it's actually known as the NIFTY 50 which was launched on 1st April 1996 and it is owned and managed by India Index Services and Products (IISL).
The NIFTY 50 covers a total of 12 sectors of the Indian economy. During 2008-12, NIFTY 50 Index share of NSE market capitalization fell from 65% to 29% because of the rise of sectoral indices as NIFTY Bank, NIFTY IT, NIFTY Pharma, NIFTY Next 50, etc. The NIFTY 50 Index gives 29.70% of its shares to financial services, 0.73% weightage to industrial manufacturing and 0% weightage to agricultural sector.
The NIFTY 50 index is a free float market capitalization weighted index. The index initially was calculated on full market capitalization method. From June 26, 2009, the computation has been changed to free float methodology. The base period for the CNX Nifty index is November 3, 1995, which completed one year of operations of National Stock Exchange Equity Market Segment. The base value of the index has been set at 1000 and a base capital of Rs 2.06 trillion.
These are some of the things we need to know about NIFTY before entering into the field of share market.
Now I am going to tell you how bank nifty option in trading plays an important role in the stock market.
Nifty:
NIFTY is the stock index that was introduced by the NSE. Nifty futures consists of fifty stocks that area unit actively listed. Next, these stocks are from 12 different sectors of the economy. The contracts of neat rank among the foremost listed within the world. India Index Services and Products Ltd. (IISL), that could be a subsidiary of NSE Strategic Investment Corporation restricted, manages and owns bank Nifty Option. The neat fifty is another necessary term that has to be understood before mercantilism within the stock markets. Therefore, allow us to take a glance at it and also the connected terms.
Sensex:
SENSEX is also a stock index that was introduced by the BSE. SENSEX consists of 30 stocks that are actively traded. Furthermore, these stocks belong to different sectors of the economy.
Intraday:
It involves in daily market. The buying and selling of shares on the same day refers to intraday. The traders hold its shares for few minutes to some hours, upto market closes. If the trader buy or sells any shares in intraday and do nothing with that upto market off time then it automatically square off with market closing.
Holding:
It involves with weekly or monthly market. The buying, selling of the shares may take 2-3 days to a few months to a year. In this case investment is for long period.
These were some basics you should know while entering into the market. Besides these, Stop loss, scalping and some other terms should be known to you.
Stop Loss:
It is used in trading to stop your loss by auto squaring off your shares while reach that target.
While target, is also a term used to make profit by auto squaring off when it reaches to it target.
Both stop loss and target have similar work with different purpose.
Auction Market Procedure:
The process involved in an auction market differs from the process in an over-the-counter (OTC) market. On the NYSE, for example, there are no direct negotiations between individual buyers and sellers, while negotiations occur in OTC trades. Most ancient auctions involve multiple potential consumers or bidders, but only a single seller, whereas auction markets for securities have multiple buyers and multiple sellers, all looking to make deals simultaneously.
Strategies of auction market theory:
Auction market is the place where buyers and sellers enter competitive bids simultaneously.
The price at which a stock trades represents the highest price that a buyer is willing to pay and the lowest price that a seller is willing to accept. A double auction market is when a buyer’s price and a seller’s asking price get match, and the trade proceeds at that price. Auction markets do not involve direct negotiations between individual buyers and sellers, while negotiations occur for OTC trades. The U.S. Treasury holds auctions, which are open to the public and large investment entities, to finance certain government financial activities.
Order flow:
The term order flow comes from market manufacturers and specialists receiving giant orders to figure. The better worth they got for the order, the more order flow they got. The a lot of order flow, the a lot of they created in commissions.
Market profile:
Market Profile Open Type and Confidence:
Reading the profile right from the day open offers a lot of confidence to on a daily basis monger towards trade conviction. The confidence level of the opposite timeframe monger (Long Term or point trader) will be analysed through market gap.
Market Profile – Spike and Spike Rules:
By perceptive Spike action in market and therefore the next days follow through with action one will confirm whether or not the previous days spike action is fake move to confuse the traders or it's reaching to produce a property trend towards the spike direction.
Market Profile – Failed Auction:
Failed Auction is a Market Profile Pattern brought to the world by Ray Barros of Trading Success. Failed Auction provides monger an excellent chance to trade with dynamic outlook and constructing his/her commerce rules consequently.
Nifty futures:
Bank Nifty Futures is the stock index that was introduced by the NSE. NIFTY consists of fifty stocks that area unit actively listed. Furthermore, these stocks belong to twelve completely different sectors of the economy. The contracts of slap-up rank among the foremost listed within the world. India Index Services and Products Ltd. (IISL), that may be a subsidiary of NSE Strategic Investment Corporation restricted, manages and owns Nifty. The slap-up fifty is another vital term that has to be understood before commerce within the stock markets. Therefore, allow us to take a glance at it and therefore the connected terms.
The organisation takes the responsibility to authorise all the chance of holding shares of the general public.The organisation analysis fine concerning the corporate and initial public providing of the shares to the general public.
If they notice something wrong in their commercialism then they reject that company for listing in the market.
How trading in bank NIFTY option makes sense?
As we all know that the Nifty 50 Index is a basket of 50 stocks. These stocks are selected to represent a wide section of the India economic sectors. This makes Nifty a good representative of the bigger economic activity in all over India. This naturally means if the general economic activity is going up or at least expected to go up then Nifty’s value will also goes up, and vice versa. This also makes trading in bank Nifty Futures a much better choice as compared to any single stock futures.
This is all about the NIFTY and how does bank NIFTY option in trading plays an important role in the field of stock market.
Thank you!